Morning Commentary: Infinera convertible notes jump early in secondary market debut

By Abigail W. Adams

Portland, Me., Aug. 4 – The convertible secondary space saw another active morning with more new paper making its aftermarket debut.

Infinera Corp. priced an upsized $325 million of six-year convertible notes after the market close on Wednesday at par with a coupon of 3.75% and an initial conversion premium of 32.5%.

Pricing was mixed with the notes coming at the cheap end of talk was for a coupon of 3.25% to 3.75% and at the rich end of talk for an initial conversion premium of 27.5% to 32.5%.

The new paper hit the secondary space on a choppy day for equity markets with indexes pulling back after a strong rally over the past few sessions.

The Dow Jones industrial average was down 70 points, or 0.21%, the S&P 500 index was down 0.16%, the Nasdaq Composite index was down 0.09%, and the Russell 2000 index was down 0.19% shortly before 11 a.m. ET.

However, the notes skyrocketed out of the gate.

The 3.75% convertible notes were marked at 103.75 bid, 104.5 offered early in the session.

They expanded upwards of 3.75 points on swap, a source said.

After launching the day in the green, Infinera’s stock sank back to the red and was changing hands at $5.05, a decrease of 1.56%, shortly before 11 a.m. ET.

Approximately $283.6 million of proceeds will be used to repurchase an aggregate principal amount of $300 million of the company’s 2.125% convertible notes due 2024 in privately negotiated transactions.

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