Morning Commentary: ConMed convertible notes dominate early trading, jump on debut

By Abigail W. Adams

Portland, Me., June 2 – It was an active morning in the convertibles secondary market with $700 million in new supply entering the space on Thursday.

ConMed Corp. priced an upsized $700 million, from $600 million, of five-year convertible notes after the market close on Wednesday at par with a coupon of 2.25% and an initial conversion premium of 30%.

Pricing came on the rich end of talk for a coupon of 2.25% to 2.75% and at the midpoint of talk for an initial conversion premium of 27.5% to 32.5%, according to a market source.

While it was another volatile day for equity markets with indexes again wavering between gains and losses early in the session, the new paper jumped on debut.

“They did very well; they opened up right out of the gate,” a source said.

Early prints were between 102.75 and 104 on an outright basis.

The new paper was seen 3 points better on hedge, a source said.

ConMed’s 2.625% convertible notes due 2024 also saw heavy volume with several prints at 137.5.

The activity in the 2.625% notes was the result of a buyback, a source said.

ConMed entered into privately negotiated transactions to repurchase or exchange $275 million in principal of the 2.625% convertible notes for $277.5 million in cash and 0.9 million shares of common stock.

ConMed’s stock was changing hands at $114.94, an increase of 2.83%, shortly before 11 a.m. ET.

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