Coherus, Dick’s Sporting Goods convertibles expand on debut; Saber, Burlington active

By Abigail W. Adams

Portland, Me., April 15 – After an onslaught of new deal activity earlier in the week, the convertibles primary market was quiet on Wednesday as equity markets slumped following weak earnings and economic data.

Following the $1.95 billion that priced over five deals on Monday and Tuesday, many were predicting a quiet end to the week.

“There are still people that will buy stuff; there’s just a little fatigue,” a market source said.

Dick’s Sporting Goods, Inc.’s newly priced 3.25% convertible notes due 2025 and Coherus BioSciences, Inc.’s 1.5% convertible notes due 2026 made their secondary market debut on Wednesday with both notes seeing a dollar-neutral expansion.

Burlington Stores Inc.’s newly priced 2.25% convertible notes due 2025 and Sabre Corp.’s 4% exchangeable notes due 2025 remained active their second day in the secondary space, although the notes were little changed on a dollar-neutral basis.

Despite the flood of new paper over the past two weeks, accounts were not engaging in a lot of selling activity to make room for new issuance, which is typically the case, a market source said.

March saw a massive reshuffling of portfolios, which begged the question if most of the selling activity had already taken place.

Dick’s expands

Dick’s Sporting Goods priced $500 million of five-year convertible notes after the market close on Tuesday at par at the rich end of talk with a coupon of 3.25% and an initial conversion premium of 35%.

Price talk was for a coupon of 3.25% to 3.75% and an initial conversion premium of 30% to 35%, according to a market source.

The new paper from the sporting goods retailer hit the secondary space as data showed the largest plunge in monthly retail sales on record – sales fell 8.7% in March, Bloomberg reported.

And April is expected to be worse.

However, Dick’s Sporting Goods’ 3.25% convertible notes due 2025 were largely holding at par as stock traded off, sources said.

However, they closed the day at 99.75, a market source said.

Sources pegged the notes between 1 point to 2 points expanded on a dollar-neutral, or hedged, basis.

However, Dick’s stock is short-sale restricted and cannot be shorted when stock is down more than 10%, a market source said, so it is unclear where hedge players had their shorts.

The 3.25% notes were the most actively traded in the secondary space with $141 million in reported volume in the late afternoon.

Dick’s stock traded to a low of $24.86 and a high of $25.94 before closing the day at $25.11, a decrease of 4.20%.

Coherus expands

Coherus BioSciences priced $200 million of six-year convertible notes after the market close on Tuesday at par with a coupon of 1.5% and an initial conversion premium of 30%.

Pricing came at the rich end of tightened talk for a coupon of 1.5% to 1.75% and an initial conversion premium of 30%, according to a market source.

Initial price talk was for a yield of 1.75% to 2.25% and an initial conversion premium of 25% to 30%.

The new paper was making gains on both an outright and dollar-neutral basis.

They were seen slightly above par with stock down more than 3% early in Wednesday’s session.

The 1.5% notes were marked at 100.25 bid, 101 offered in the late afternoon.

While the notes were seen expanded about 2 points on a dollar-neutral basis early in the session, they came in as the session progressed.

The notes expanded about 0.75 point dollar-neutral in the late afternoon, a source said.

There was about $66 million in reported volume in the late afternoon.

Coherus stock traded to a high of $14.82 and a low of $14.12 before closing the day at $14.49, a decrease of 2.19%.

Day two

New paper remained in focus in the secondary space with the deals that debuted on Tuesday continuing to see high-volume activity.

Burlington’s 2.25% convertible notes due 2025 came in slightly on an outright basis.

The notes were changing hands between 104 and 105 on Wednesday with stock off.

The notes were moving largely in line dollar-neutral, sources said.

The notes remained active with $38 million in reported volume.

Burlington stock traded to a high of 176.43 and a low of $169.00 before closing the day at $173.48, a decrease of 2.04%.

The 2.25% notes traded as high as 106 and were up more than 3 points dollar-neutral on their secondary market debut on Tuesday.

Sabre’s 4% exchangeable notes due 2025 were volatile on Wednesday.

The notes traded as low as 101 early in the session. However, they were changing hands around 105.625 Wednesday afternoon.

While the notes were contracting early in the session, they bounced back and were moving largely in line on a dollar-neutral basis, a source said.

Sabre stock traded to a high of $6.28 and a low of $5.60 before closing the day at $6.24, an increase of 2.72%.

Mentioned in this article:

Burlington Stores Inc. NYSE: BURL

Coherus BioSciences, Inc. Nasdaq: CHRS

Dick’s Sporting Goods, Inc. Nasdaq: CHRS

Sabre Corp. Nasdaq: SABR

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