Midday Commentary: EMC lower, in line after earnings; Medivation sees positive drug trial news

By Rebecca Melvin

New York, Oct. 22 - Convertible debt was mostly quiet in light volume early Tuesday as earnings news and other headlines spurred some action.

EMC Corp.'s 1.75% convertibles due Dec. 1, 2013 traded down about 5 points on an outright basis, but were in line with the underlying shares, after the Hopkinton, Mass.-based data storage and software company reported third-quarter earnings and revenue that missed estimates. The company also lowered its full-year outlook.

"The bond has no premium so it will move with the underlying shares until it converts in December," a Connecticut-based analyst said.

Elsewhere, Medivation Inc.'s convertibles started out lower on swap by about 2 points but then recovered to about flat on hedge after the San Francisco-based drug developer said a late-stage study of its prostate cancer treatment Xtandi has been halted because the drug had been so effective.

The Xtandi drug generated a statistically significant overall survival advantage when compared to placebo in an international study of more than 1,700 men with advanced prostate cancer who had not received chemotherapy.

Medivation's 2.625% convertibles due 2017 were seen last at 128.25 bid, 129 offered versus an underlying share price of $50.00.

That level was flat on hedge, according to a market source.

Meanwhile equities were modestly higher after a weak jobs report. The September report showed U.S. nonfarm payrolls added 126,000 jobs, which was below economists' expectations for a gain of 180,000 jobs. U.S. unemployment ticked down however to 7.2% from 7.3% in August. Economists had predicted the unemployment rate would remain steady.

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