Morning Commentary: Cerevel Therapeutics convertible notes skyrocket on debut

By Abigail W. Adams

Portland, Me., Aug. 12 – The last new convertible bonds in what has been an active week for new deal activity made their secondary market debut on Friday.

Cerevel Therapeutics Holdings Inc. priced an upsized $300 million offering of five-year convertible notes after the market close on Thursday at par to yield 2.5% with an initial conversion premium of 32.5%.

Pricing came at the rich end of tightened talk for a coupon of 2.5% to 2.75% and on top of talk for an initial conversion premium of 32.5%, according to a market source.

Initial talk was for a coupon of 2.75% to 3.25% and an initial conversion premium of 27.5% to 32.5%.

Concurrently, Cerevel priced a secondary offering of 7.25 million shares at a public offering price of $35 per share.

The deal played to heavy demand during bookbuilding with allocations tight, a source said.

The concurrent equity offering was heard to be 2x to 3x oversubscribed.

Cerevel’s 2.5% convertible notes skyrocketed on debut.

The notes traded as high as 106 on an outright basis out of the gate.

They expanded 5 to 6 points dollar-neutral, depending on whether the hedge was against Thursday’s close or the concurrent offering, a source said.

Cerevel’s stock was changing hands at $35.33, a decrease of 0.84%, shortly before 11 a.m. ET.

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