Morning Commentary: 1Life Healthcare convertible eyed; Pioneer Natural active

By Abigail W. Adams

Portland, Me., May 26 – The convertibles primary market returned to action in the return from the holiday weekend with one new deal on deck.

1Life Healthcare Inc. plans to price $250 million of five-year convertible notes after the market close on Monday with price talk for a coupon of 2.5% to 3% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

The deal was heard to be marketed with assumptions of 750 bps over Libor and a 43% vol.

Using those assumptions, the deal looked about 6.5 points cheap at the midpoint of talk., a source said.

1Life Healthcare, which does business as One Medical, went public in January with a stock price of $14.00.

The membership-based primary health care company, which operates on a combination of in-person and virtual appointments, released its second earnings report about two weeks ago.

The company beat analyst expectations with revenue of $78.76 million versus expectation for revenue of $74.79 million.

Membership was also on the rise.

Meanwhile, the secondary space was relatively active on what is typically a slow return from the holiday weekend.

There was about $87 million in reported volume about one hour into Tuesday’s session, a market source said.

Pioneer Natural Resources Co.’s 0.25% convertible notes due 2025 were active with the notes continuing to gain on an outright basis.

The 0.25% notes were up about 2 points outright to change hands at 109.625 with stock up over 3%.

Pioneer Natural Resources stock traded up to $96.15, an increase of 4.02%, shortly before 11 a.m. ET.

The oil and gas company was continuing to post gains as the rally in crude oil futures continued on an expected uptick in demand.

WTI crude oil futures rose to $34.07, an increase of 82 cents, or 2.47%, early Tuesday.

The company also announced that it was upsizing its tender offer for three series of notes from $500 million to $724.59 million, which was the amount tendered as of May 22, according to a company news release.

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