DexCom, Insulet convertible notes active, level off after sell-off; PagerDuty below par

By Abigail W. Adams

Portland, Me., Oct. 13 – The convertibles secondary space saw a quiet close to the week with activity surrounding recent issues tempering and broader markets volatile as the big banks kick off earnings season.

While bank earnings were good, the market is still assessing rate risk with alarms sounding about their delayed impact on the economy.

“There’s a plus column and a negative column here,” a source said.

Equity indexes were mixed on Friday with the tech heavy Nasdaq and the small cap indexes the underperformers despite moderate gains in Treasuries.

The Dow Jones industrial average closed Friday up 39 points, or 0.12%, the S&P 500 index closed down 0.50%, the Nasdaq Composite index closed down 1.23% and the Russell 2000 index closed down 0.84%.

There was $63 million in reported volume about one hour into the session and $333 million on the tape by the late afternoon with few names seeing concentrated trading activity.

The flurry of activity surrounding PagerDuty Inc.’s 1.5% convertible notes due 2028, the sole deal to clear the primary market over the course of the week, continued to wane.

However, the notes were slightly stronger on hedge amid the activity that did occur although they remained below par on an outright basis.

Diabetes management companies Insulet Corp.’s and DexCom Inc.’s convertible notes remained active although they were unchanged on the day after Ozempic shook up the sector.

PagerDuty up on hedge

PagerDuty’s recently priced 1.5% convertible notes due 2028 remained strong on hedge on Friday although the notes remained below par on an outright basis.

The 1.5% notes were largely unchanged on an outright basis as stock continued to decline.

They were trading at 99.125 versus a stock price of $20.41 in the late afternoon, according to a market source.

The notes were slightly stronger on hedge after coming in the previous session, a source said.

There was $6 million in reported volume.

PagerDuty’s stock traded to a low of $20.28 and a high of $20.69 before closing at $20.59, up 0.44%.

PagerDuty’s $350 million offering of 1.5% convertible notes due 2028 was the sole deal to clear the primary market over the week.

The 1.5% convertible notes were strong on both an outright and dollar-neutral basis on their aftermarket debut on Wednesday.

However, they fell below par and came in on hedge the previous session.

While in from their heights, the notes remain expanded about 1.375 points dollar-neutral since pricing, a source said.

The Ozempic effect

DexCom’s and Insulet’s convertible notes remained active on Friday as the heavy selling in stock sparked by Ozempic’s promise as a treatment for kidney disease showed signs of abating.

DexCom’s 0.25% convertible notes due 2025 remained largely unchanged with the notes continuing to trade on a 91-handle.

The notes were trading at 91.625 early in the session with the yield about 4.5%, according to a market source. They were wrapped around 91.5 in the late afternoon.

There was $10 million in reported volume.

DexCom’s 0.375% convertible notes due 2028 improved in active trade.

The notes gained about 0.25 point outright to trade at 83.25 with the yield also about 4.5%.

There was $13 million in reported volume.

DexCom’s convertible notes are heavily busted and have long traded for their yield.

While the shorter duration notes have held steady on a 91-handle as DexCom’s stock dropped, the 2028 notes have fallen about 2 points outright.

DexCom’s stock traded to a low of $74.75 and a high of $76.44 before closing at $76.19, up 0.93%.

Stock has fallen almost 9% over the past week.

Insulet’s 0.375% convertible notes due 2026 were active early although activity in the name tempered as the session progressed.

The notes were up about 1 point outright on a strong day for stock.

Insulet’s 0.375% notes were changing hands at 92 versus a stock price of $132.14 early in the session, according to a market source.

There was $3 million in reported volume.

Insulet’s stock traded to a low of $126.63 and a high of $133.72 before closing at $132.38, an increase of 3.61%.

Stock has fallen 8.68% over the past week.

News that weight loss drug Ozempic proved effective as a treatment for kidney disease sparked a broad based sell-off in kidney treatment, medical device, and diabetes management companies over the past week.

However, the selling pressure showed signs of abating on Friday with several sources seeing the market reaction as overdone.

Mentioned in this article:

DexCom Inc. Nasdaq: DXCM

Insulet Corp. Nasdaq: PODD

PagerDuty, Inc. NYSE: PD

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.