Market awaits PROS Holdings convertible notes; Pacira Biosciences expands; DISH improves

By Abigail W. Adams

Portland, Me., May 1 – While earnings related news continued to dampen convertibles new issue activity, the primary market remained active with a new deal on deck.

PROS Holdings Inc. plans to price $125 million of five-year convertible notes after the market close on Wednesday. The deal looked cheap to fair value based on assumptions used, sources said.

Meanwhile, volume was light in the secondary space with European accounts out for May Day.

There was $49 million on the tape about one hour into Wednesday’s session and $239 million on the tape by the late afternoon.

DISH Network Corp.’s 3.375% convertible notes were among the most active during Wednesday’s session with the notes improving.

Pacira Biosciences Inc.’s 2.375% convertible notes due 2022 were posting gains on an outright and dollar-neutral basis as stock soared after the Food and Drug Administration rejected a competitor’s drug application.

Aerojet Rocketdyne Holdings Inc.’s 2.25% convertible notes due 2023 saw large gains on an outright basis but were largely unchanged dollar-neutral following an earnings beat.

PROS Holdings eyed

PROS Holdings plans to price $125 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 0.75% to 1.25% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

The deal appeared to be fair value to about 0.5 point cheap using assumptions of 300 bps over Libor and a 32% vol., a market source said.

Another source pegged assumptions as 375 bps over Libor and a 75% vol., which modeled about 1 point cheap.

Proceeds from the offering will be used to exchange or retire the company’s outstanding 2% notes due Dec. 1, 2019.

The 2% notes jumped almost 10 points outright to 149 on April 26 as stock soared following an earnings beat. PROS stock hit a 52-week high of $53.35 following its earnings report.

DISH improves

DISH Network’s 3.375% convertible notes due 2026 were among the major volume movers on an otherwise quiet day in the secondary space on Wednesday.

The notes were slightly improved in active trading. They were changing hands at 92.

DISH stock closed Wednesday at $35.04, a decrease of 0.23%.

While there were concerns about DISH’s subscriber base, the convertible bonds and stock were improving in the run up to the television provider’s earnings report.

DISH is scheduled to report earnings before the market open on Friday.

Pacira expands

Pacira Biosciences’ 2.375% convertible notes due 2022 were making gains on both an outright and dollar-neutral basis as stock soared following the FDA’s rejection of a competitor’s medication.

The 2.375% notes rose about 5 points outright. They were changing hands around 104.5 early in the session and closed the day just shy of 105, sources said.

The 2.375% notes were up about 0.5 point on a dollar-neutral basis. However, the notes were trading rich heading into the session, a market source said.

Pacira stock traded as high as $47.50 before closing the day at $46.25, an increase of 16.15%.

Stock soared following news the FDA rejected Heron Therapeutics’ application for a new pain management drug.

The FDA rejected Heron’s HTX-011 medication, which was a competitor to Pacira’s Exparel.

Pacira is scheduled to report earnings before the market open on Thursday.

Aerojet unchanged

Aerojet’s 2.25% convertible notes due 2023 saw some activity in the secondary space on Wednesday as stock rose following an earnings beat.

While the notes made large gains on an outright basis, they were unchanged dollar-neutral, a market source said.

The 2.25% notes rose 10 points outright to close the day at 152.82.

Aerojet stock closed Wednesday at $37.02, an increase of 9.33%.

Aerojet reported earnings per share of 44 cents versus analyst expectations for earnings per share of 31 cents.

Mentioned in this article:

Aerojet Rocketdyne Holdings Inc. NYSE: AJRD

DISH Network Corp. Nasdaq: DISH

Pacira Biosciences Inc. Nasdaq: PCRX

PROS Holdings Inc. NYSE: PRO

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