Colony Starwood’s new deal trades above par; Michelin taps the market; Clovis on the rise

By Stephanie N. Rotondo

Seattle, Jan. 5 – A convertible bond trader said the market had the “new issue blues” on Thursday, as all of the focus was on Colony Starwood Homes’ $300 million of 3.5% convertible senior notes due 2022.

The deal came late Wednesday, upsized from $250 million. Initial price talk was a 3.25% to 3.75% yield with a conversion premium of 20% to 25%.

“It’s the only thing trading,” a trader said, seeing the issue in a 100.5 to 100.875 range at mid-morning. “Everybody gets involved in one name” and forgets anything else, he commented.

The paper slipped a bit toward the end of the day, with a trader pegging the bonds at 100.25 bid, 100.5 offered.

In the wake of the new deal, the company’s equity was off 12 cents at $29.38.

Morgan Stanley & Co. LLC ran the books.

Proceeds from the Rule 144A offering will be used to privately repurchase some of the issuer’s 4.5% convertible senior notes due 2017, to repay a portion of borrowings outstanding under its credit facilities, to fund potential acquisitions and for general corporate purposes.

Meanwhile, the market had another deal to look forward to as Michelin launched and priced an upsized $500 million offering of 0% non-dilutive, cash-settled convertible bonds due 2022, with a conversion premium of 28%.

Price talk was for yield of 0% to 0.4% with a conversion premium of 23% to 28%.

The issue was upsized from an originally announced $400 million.

Once issued, the dollar-denominated paper will convert to euros. The company noted that because of the terms and the conversion to euros, it was able to “raise a euro financing with a negative yield.”

Proceeds will be used for general corporate purposes.

Clovis gains

In secondary trading, Clovis Oncology Inc.’s 2.5% convertible notes due 2021 were firming as the company said it had raised $205 million from a common stock offering.

Proceeds from the sale will be used for the marketing and sales of its new ovarian cancer drug, Rubraca.

The convertibles gained about 3 points to straddle 107, according to a market source. The bonds had been in the mid-80s in August.

The underlying equity meantime surged $1.66, or 3.72%, to $46.33.

Clovis has submitted Rubraca – the branded name – for an accelerated approval process in August, which helped the bonds and stock rally. The Food and Drug Administration officially gave the drug the green light in mid-December.

News of the drug’s success – 54% of those participating in clinical trials responded favorably to the drug – was a boon for Clovis, which has struggled since the FDA rejected its lung cancer drug, rociletnib, in 2015. In May 2016, the company said it would have to lay off about 35% of its workforce.

The pharmaceutical company is based in Boulder, Colo.

Mentioned in this article:

Clovis Oncology Inc. Nasdaq: CLVS

Colony Starwood Homes NYSE: SFR

Michelin EPA: ML

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.