Morning Commentary: Medicines convertibles in focus on buyout; broader secondary quiet

By Abigail W. Adams

Portland, Me., Nov. 25 – The convertible secondary space was quiet early in Monday’s session even as equities ticked higher on positive news from the trade front.

Focus centered on Medicines Co.’s convertible notes following news a long-speculated buyout by Novartis had come to pass.

The convertible notes from the maker of the cholesterol medication inclisiran were trading at a slight discount to their takeout price, a market source said.

The convertible notes will disappear as part of the all-cash transaction, the source said.

Medicines’ 2.75% convertible notes due 2023 jumped more than 26 points outright to 172.5 early in Monday’s session.

The 2.5% convertible notes due 2022 rose almost 40 points to 250.

Medicines’ most recently priced 3.5% convertible notes due 2024 were not actively traded. However, the notes were up to triple par, a market source said.

The 3.5% tranche, which priced about one year ago, is the smallest and least liquid of Medicines’ convertible notes with $172 million outstanding.

The 2.5% convertible notes have $400 million and the 2.75% convertible notes have $402.5 million outstanding, according to Trace data.

News broke early Monday that Novartis would acquire Medicines for $85.00 a share plus convertible debt for a total of $9.7 billion.

Medicines stock jumped in early trading, hitting $83.88, an increase of 22.36%, shortly before 11 a.m. ET.

Medicines stock and convertible notes surged earlier in the month on speculation a buyout of the company was near at hand.

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