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Morning Commentary: Depomed convertibles weaken on wider loss; Dermira, Becton deals on deck
By Stephanie N. Rotondo
Seattle, May 10 – Wednesday’s trading session was all about fresh earnings and upcoming new convertible bond deals, according to market sources.
Depomed Inc. released its first-quarter results late Tuesday, reporting a 14% wider net loss on lower sales.
That didn’t bode well for the company’s 2.5% convertible notes due 2021, which were seen down at least 4 to 5 points on the day.
At mid-morning, a source pegged the paper around 85, though he noted that the paper had traded to lows around 83.
As for the company’s equity (Nasdaq: DEPO), it was off 59 cents, or 5.38%, at $10.37.
Meanwhile, the market was waiting for new issues from Dermira Inc. and Becton, Dickinson & Co. to price.
Both deals are expected after the session’s close.
Dermira said late Tuesday that it was offering $250 million convertible senior notes due 2022. Becton, for its part, said on Monday that it was selling $2.25 billion of mandatory convertible preferred stock.
Price talk on Dermira is for a yield of 2.75% to 3.25% with an initial conversion premium of 25% to 30%.
Leerink Partners and Cowen & Co. are the joint bookrunners.
Talk on Becton’s $50-par convertible preferred sale is for a yield of 6% to 6.5% with an initial conversion premium of 17.5% to 22.5%.
Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, MUFG, BNP Paribas Securities Corp., Barclays and Wells Fargo Securities LLC are the bookrunners.
Ahead of pricing, both companies were seeing their stock sell off.
Dermira’s shares (Nasdaq: DERM) were down over 16% at mid-morning, while Becton (NYSE: BDX) was about 1.5% lower.
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