Convertibles primary prices $1.06 billion; Vishay, Mindbody, Exact Sciences active

By Abigail W. Adams

Portland, Me., June 8 – After a sluggish start to the week, the convertibles space ended with a roar with $1.06 billion in new paper hitting the market on Friday.

New paper from Vishay Intertechnology Inc., Mindbody Inc. and Exact Sciences Corp. dominated trading activity in the secondary space, collectively accounting for $192 million of the $520 million in trading volume by late afternoon.

While Vishay’s new convertible notes expanded, Mindbody’s new convertible notes were flat to slightly contracted on a dollar-neutral basis, sources said.

While new paper was the focus of the secondary space on Friday, Acorda Therapeutics Inc.’s 1.75% convertible notes due 2021 were volatile, jumping as much as 10 points outright to 103 early in the session but closing the day at 98.

Vishay’s deal

Vishay priced an upsized offering of $600 million of seven-year convertible notes after the market close on Thursday with a coupon of 2.25% and an initial conversion premium of 27.5%.

Pricing came richer than price talk for a coupon of 2.5% to 3% and at the rich end of talk for an initial conversion premium of 22.5% to 27.5%, according to a market source.

While the deal priced with a coupon that was richer than price talk, it modeled cheap, sources said.

The offering was upsized to $600 million from $525 million. However, the greenshoe of $75 million was eliminated.

Vishay’s new 2.25% convertible notes were expanding on their market debut as its stock came in from a more than 13% gain on Thursday.

The 2.25% notes were seen trading between 100.25 and 100.5 out of the gate but dropped below par to 99.8 as the stock got hit.

While the notes dropped below par, they were expanding dollar neutral and were seen up about 1 point, a market source said.

The new 2.25% notes appeared to move on a 72% delta. As the bonds traded down outright, the premium widened, a source said.

“It’s doing what it’s supposed to do,” the source said.

The notes popped back above par as stock recovered and were seen trading at 100.6 versus an equity price of $24.50 later in the afternoon with the notes maintaining their expansion.

The 2.25% notes due 2025 saw high-volume trading with more than $93 million of the bonds changing hands by late afternoon.

Vishay stock also saw extremely high trading volume with more than 15.5 million shares traded as opposed to the 90-day average of 1.6 million shares.

Vishay stock closed Friday at $24.15, a decrease of 2.23%.

Vishay stock spiked on Thursday with more than 20x the average trading volume as book building for the new 2.25% notes was in the works.

With the old bonds heavily hedged, the spike in stock price and trading volume was the result of a stock buyback as holders moved out of the old notes, a source said.

Proceeds from the $600 million offering will be used to repurchase $220 million principal amount of its 2.25% convertible notes due 2040 and $69 million principal amount of its 2.25% convertible notes due 2042 through individually negotiated agreements with a limited number of holders, according to a company news release.

Mindbody holds

Mindbody sold an upsized $270 million of five-year convertible notes prior to the market open on Friday at the midpoint of talk with a coupon of 0.375% and an initial conversion premium of 30%.

Price talk had been for a coupon of 0.125% to 0.625% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

The deal was upsized to $270 million from $200 million. “It did well,” a market source said.

Mindbody’s new 0.375% convertible notes due 2023 were seen trading between par and 101 on their market debut on Friday.

While the notes were up on an outright basis, they were flat dollar neutral, a market source said.

“It’s basically trading around a 30% premium,” the source said. “That’s where it came and that’s where it’s holding.”

The notes move on about a 70% delta, a market source said.

The 0.375% notes were coming in slightly later in the session. They were seen trading at 101 versus an equity price of $39.00 with about $60 million of the bonds in play.

Mindbody stock closed Friday at $39.10, an increase of 2.62%.

Exact Sciences adds on

In an overnight deal, Exact Sciences priced an upsized $190 million add-on to its 1% convertible notes due 2025 at a reoffer price of 106.5 plus accrued interest from Jan. 17.

There was no price talk for the overnight deal, which was heard to be as much as 3x oversubscribed, a market source said.

The add-on priced about 1.25 points down dollar neutral from the previous levels of the 1% convertible notes, a market source said.

The notes were seen trading between 106.5 and 106.75 on an outright basis early in Friday’s session.

They climbed alongside stock as the session progressed and were seen trading at 108.25 versus an equity of $63.08.

Exact Sciences’ 1% convertible notes were the third most actively traded of Friday’s session with about $40 million of the bonds on the tape.

Exact Sciences stock closed Friday at $63.26, an increase of 0.09%.

In the run up to the add-on, the convertible notes were trading with outright prices between 110 and 112, according to Trace data.

Exact Sciences priced an upsized $600 million of the 1% notes with an issue price of 98.75 in mid-January, with the $90 million greenshoe later exercised in full.

The notes from the Madison, Wis.-based molecular diagnostics company, which is focused on the early detection of colorectal cancer, experienced a selloff shortly after pricing.

They traded as low as 88 in early April but rebounded after a positive first-quarter earnings report later in the month.

The notes were trading in the 98 to 99 range for much of May but jumped on an outright basis after the American Cancer Society lowered its recommended screening age for colorectal cancer to 45 from 50.

Acorda volatile

Acorda Therapeutics 1.75% convertible notes due 2021 were volatile on Friday with the notes up more than 10 points as stock spiked 30% early in the session.

The notes traded up to 103.5 soon after the opening bell but dropped alongside stock as the session progressed.

The notes were seen trading at par versus an equity price of $32.65 in the late afternoon and closed the day at 98, sources said.

While the notes dropped from their early high on Friday, they were still up about 4 points outright at the market close.

After trading to a high of $36.35 and a low of $28.20, Acorda stock closed Friday at $30.40, an increase of 8.96%.

The volatility in Acorda’s convertible notes and stock came on the heels of oral arguments in the U.S. Court of Appeals on Thursday.

Acorda has been fighting to keep the patent on its multiple sclerosis drug Ampyra, which had been expected to go generic.

“The stock move would suggest that they won, but no one knows for sure,” a market source said early in the session. There were no official announcements by the market close.

Mentioned in this article:

Acorda Therapeutics Inc. Nasdaq: ACOR

Exact Sciences Corp. Nasdaq: EXAS

Mindbody Inc. Nasdaq: MB

Vishay Intertechnology Inc. NYSE: VSH

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