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Morning Commentary: Innoviva prices, dominates early trading; Illumina paper firms post-earnings
By Stephanie N. Rotondo
Seattle, Aug. 2 – The convertible bond market was aflutter over Innoviva Inc.’s $175 million issuance of 2.5% convertible senior notes due 2025 early Wednesday.
The deal priced ahead of the open, coming with an initial conversion premium of 30%.
Price talk was for a 2.25% to 2.75% yield and a premium of 27.5% to 32.5%.
A market source said the paper was trading either side of par in early dealings.
The company’s stock (Nasdaq: INVA) was sliding in the wake of the new deal, falling 45 cents, or 3.39%, to $12.83.
Morgan Stanley & Co. LLC and Deutsche Bank Securities Inc. ran the books.
The paper is convertible into 57.9240 common shares per each $1,000 of notes, equal to an initial conversion price of $17.26. Prior to Feb. 15, 2025, the notes are convertible only in certain circumstances. After that date, the debt can be converted at any time.
The convertibles are non-callable for life.
The transaction is being done as part of the company’s plan to refinance its 9% fixed rate term notes due 2029. Proceeds from the convertibles offering will be used to redeem a portion of the issue on Aug. 15.
The company will also use the funds to purchase $17.5 million of common stock via privately negotiated transactions.
Meanwhile, Illumina Inc.’s 0% convertible notes due 2019 were faring well after the company reported better-than-expected earnings.
One source placed the notes in a 103 to 104 context, which was up from 101.5 previously.
A second source pegged the paper around 104.
As for the underlying equity (Nasdaq: ILMN), it was up $19.71, or 11.44%, to $192.01 at mid-morning.
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