ConMed convertible notes jump on debut; NextEra active; Public Storage gains outright

By Abigail W. Adams

Portland, Me., June 2 – It was an active day in the convertibles secondary market with $700 million in new supply entering the space on a strong day for equity markets.

ConMed Corp. priced an upsized $700 million of five-year convertible notes after the market close on Wednesday.

The new paper accounted for more than one-fourth of the $578 million on the tape about one hour before the market close and was making large gains on an outright and dollar-neutral basis.

Outside of ConMed, activity in the space was light although the market remained firm as equity indexes shook off early selling pressure and closed the day with large gains.

The Dow Jones industrial average closed up 435 points, or 1.33%, the S&P 500 index closed up 1.84%, the Nasdaq Composite index closed up 2.69% and the Russell 2000 index closed up 2.25%.

NextEra Energy Partners, LP’s 0% convertible notes due 2025 were making outright gains on a strong day for the company’s stock.

Pure Storage Inc.’s 0.125% convertible notes due 2023 made large outright gains alongside stock after trouncing earnings expectations.

ConMed dominates

ConMed 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.

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.

They were changing hands at 104.125 versus a stock price of $114.58 in the late afternoon.

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

There was $166 million in reported volume about one hour before the market close.

ConMed’s 2.625% convertible notes due 2024 also saw heavy volume on Thursday as a result of the company’s contemporaneous repurchase of the notes.

There were several prints prior to the market open at 137.5, which appeared to be their buyback price, a source said.

There was about $10 million in reported volume.

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 traded to a high of $116.33 and a low of $112.29 before closing the day at $115.65, an increase of 3.46%.

NextEra active

NextEra’s 0% convertible notes due 2025 were making gains on an outright basis on a strong day for the company’s stock.

The 0% notes rose 2 points with stock up 3%.

They were changing hands at 104.875 versus a stock price of $74.13 in the late afternoon.

There was $10 million in reported volume.

NextEra’s stock traded to a low of $72.18 and a high of $75.46 before closing the day at $75.13, an increase of 4.13%.

The 0% notes have jumped 14 points over the past two weeks.

They traded down to 91 on May 12, their lowest level since pricing, as stock hit a 52-week low of $61.31.

NextEra priced the $600 million issue at 98.25 in December 2020.

Pure Storage’s earnings

Pure Storage’s 0.125% convertible notes due 2023 made large gains on an outright basis as stock surged following a surprise earnings beat.

The 0.125% notes jumped more than 9 points outright with stock up 18%.

They were changing hands at 119.375 versus a stock price of $28.41 in the late afternoon.

While the notes saw large outright gains, they were moving in line on swap, a source said.

There was $6 million in reported volume.

Pure Storage’s stock traded to a low of $26.63 and a high of $29.17 before closing the day at $28.37, an increase of 18.16%.

Stock surged after the data storage company trounced expectations with earnings per share of 25 cents versus analyst expectations for earnings of 4 cents.

Revenue was $620.40 million versus analyst expectations for revenue of $519.48 million.

Mentioned in this article:

ConMed Corp. NYSE: CNMD

NextEra Energy Partners, LP NYSE: NEP

Pure Storage Inc. NYSE: PSTG

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