Smart Global convertible notes expand on debut; Assertio skyrockets; Synaptics expands

By Abigail W. Adams

Portland, Me., Feb. 7 – Friday opened with more new paper entering the convertibles secondary space.

In an overnight deal, Smart Global Holdings Inc. priced an upsized $220 million of six-year convertible notes.

The new paper was expanding on its secondary market debut.

Meanwhile, Assertio Therapeutics Inc.’s convertible notes were in focus and skyrocketed following news of an asset sale with proceeds to be used to retire debt.

Synaptics Inc.’s 0.5% convertible notes due 2022 also saw high-volume activity with the notes gaining on both an outright and dollar-neutral basis as stock soared following an earnings beat.

Smart expands

Smart Global priced an upsized $220 million of six-year convertible notes prior to the market open on Friday at par with a coupon of 2.25% and an initial conversion premium of 27.5%.

Pricing came in line with talk for a fixed coupon of 2.25% and a fixed initial conversion premium of 27.5%, according to a market source.

The initial size of the deal was $200 million.

The new paper traded up out of the gate even with stock off more than 10%, a market source said.

The notes traded as high as 102.5 early in Friday’s session with most trades between 101.75 and 102, sources said.

The notes came in as the session progressed and were wrapped around 101 in the mid-afternoon.

The bonds saw more than $100 million in reported volume on Trace. However, most of the trading activity was done by underwriters without much true secondary market activity, a source said.

While the offering was most likely spoken for before it was announced, the deal was marketed with assumptions of 525 basis points over Libor and a 42% vol., according to a market source.

The borrow looked decent. However, the stock was not the most liquid.

While the deal modeled more than 7 points cheap using those assumptions, a 10% stock drop was anticipated because it was an overnighter, the source said.

With the stock drop taken into account, the deal modeled just shy of 2.25 points cheap, a source said. The deal looked to be trading at fair value in the secondary, another source said.

Smart Global Holdings stock was taking a hit on Friday following news of the convertible notes offering.

Stock traded to a low of $27.735 and a high of $29.00 before closing the day at $28.06, a decrease of 11.9%.

Assertio skyrockets

Assertio Therapeutics’ convertible notes skyrocketed in high-volume activity on Friday following news of an asset sale.

The 2.5% convertible notes due 2021 jumped almost 20 points outright. They traded up to 98 on Friday after previously trading in the mid-70s, a market source said.

Assertio’s 5% convertible notes due 2024 gained more than 27 points. They also traded up to the 97/98 level after previously trading in the 70s, the source said.

Assertio stock also skyrocketed on Friday. Stock traded to a low of $1.44 and a high of $1.71 before closing the day at $1.52, an increase of 46.15%.

However, the notes were trading for their yield, a source said.

Assertio, formerly known as Depomed Inc., announced that it was selling its NUCYNTA franchise of pain medication to Collegium Pharmaceutical Inc. for $375 million.

Proceeds will be used to retire outstanding debt, according to the company news release.

The 2.5% notes have about $145 million outstanding, according to Trace data.

The 5% convertible notes have $120 million outstanding.

The 5% notes are non-callable, so the company will either have to pay or incentivize holders to retire them, a source said.

Synaptics’ earnings

Synaptics’ 0.5% convertible notes due 2022 saw high-volume activity on Friday with the notes gaining on both an outright and dollar-neutral basis as stock skyrocketed following an earnings beat.

The 0.5% notes gained 13 points outright. They were changing hands just shy of 127 by the mid-afternoon.

The notes were expanded about 0.5 point dollar-neutral, a market source said.

Synaptics stock traded to a low of $79.35 and a high of $84.75 before closing the day at $84.47, an increase of 20.5%.

Synaptics beat analyst expectations on both the top and bottom lines in its second-quarter earnings report.

The chipmaker reported earnings per share of $2.04 versus analyst expectations for earnings of $1.45.

Revenue was $388.3 million versus analyst expectations for revenue of $355 million.

Mentioned in this article:

Assertio Therapeutics Inc. Nasdaq: ASRT

Smart Global Holdings Inc. Nasdaq: SGH

Synaptics Inc. Nasdaq: SYNA

© 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.