Morning Commentary: Innoviva plans new eight-year convertible bonds; ‘old’ bonds decline

By Stephanie N. Rotondo

Seattle, Aug. 1 – The convertible bond market was looking at the calendar early Tuesday, as Innoviva Inc. – formerly known as Theravance Inc. – was slated to bring a $175 million Rule 144A offering of eight-year convertible senior notes.

Price talk was for a 2.25% to 2.75% yield and an initial conversion premium of 27.5% to 32.5%.

The new issue was first announced late Monday. Pricing is expected after Tuesday’s close.

Morgan Stanley & Co. LLC and Deutsche Bank Securities Inc. are running the books.

Ahead of pricing, a trader said the “old” Innoviva bonds – the 2.125% convertible notes due 2023, which are linked to the company’s former moniker – were trading in a 92.5 to 92.75 context against a stock price of $13.00.

Another market source also saw the bonds trading in that range, which was deemed down 1 to 2 points.

Innoviva’s shares were down at least 1.75% at mid-morning.

A portion of the proceeds will be used to refinance the company’s 9% fixed rate term notes due 2029. The company may also use the funds for privately negotiated stock repurchase transactions.

The South San Francisco, Calif.-based biopharmaceutical company changed its name on Jan. 7, 2016, about a year and a half after it was spun off from Theravance Biopharma Inc.

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