Actionable Ideas for Companies and Sponsors

Opportunistic Refinancings of Existing Convertibles

The ability for convertible issuers to achieve extremely attractive pricing, eclipsing even pre-COVID-19 levels, is driving an acceleration in opportunistic convertible refinancing. Companies today are refinancing convertibles with maturities up to three years away, and achieving meaningfully better terms than the refinanced tranche. The most common refinancing approach involves issuing a new convertible and simultaneously repurchasing the upcoming maturity for cash during marketing. This tactic allows the company to efficiently retire a sizable portion of the convertible (typically up to 80%), create anchor demand for the new offering and mitigate the stock price file-to-offer discount. Jefferies recently led convertible refinancings for Pacira BioSciences in healthcare and Perficient in technology, raising $400 and $230 million, respectively. Both transactions lowered the coupon by more than 100 basis points, extended maturity up to three years and raised incremental capital.