Morning Commentary: Cerevel Therapeutics convertible notes offering eyed

By Abigail W. Adams

Portland, Me., Aug. 11 – New convertibles paper remained in focus on Thursday with one new offering slated to price after the market close.

Cerevel Therapeutics Holdings Inc. plans to price $250 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 2.75% to 3.25% and an initial conversion premium of 27.5% to 32.5%.

The deal was heard to be in the market with assumptions of 750 basis points over Libor and a 45% vol., according to a market source.

The deal looked about fair value, a source said.

However, some felt the 750 bps credit spread was aggressive.

Cerevel is a young company that has only been publicly traded for two years and was listed through a SPAC deal, a source said.

The deal is wall-crossed; however, the books were not quite covered at the time of launch, another source said.

The convertible notes are pricing concurrently with a $250 million secondary stock offering.

The secondary offering is expected to help boost the convertible notes.

“Usually with a stock deal it does well,” a source said. “Stock is supported the next day.”

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