Convertibles muted as week kicks off; HSBC’s CoCo deal ahead; Exelixis looks for floor

By Stephanie N. Rotondo

Phoenix, Sept. 8 – Monday’s convertible bond market started out slowly, according to one trader.

“It’s really quiet, just Monday quiet,” he said.

No new deals had been announced as of early trading either.

“They announce at night and then price the next day, so there’s no calendar,” the trader remarked.

Another trader said he had not seen any fresh details on HSBC Holdings plc’s planned offering of perpetual subordinated contingent convertibles, or “CoCos.” The London-based bank started a roadshow on the offering last week.

The investor meetings are slated to conclude on Tuesday, with pricing of the deal expected thereafter.

The company was said to be shopping around a U.S. dollar-denominated issue but that it was also considering a euro-denominated issue.

In the secondary market, Exelixis Inc.’s 4.25% convertible notes due 2019 remained topical following the company’s dismal drug trial announcement last week.

On Sept. 1 – Labor Day – the drug maker announced that its phase 3 Comet-1 study on cabozantinib – a drug for the treatment of metastatic castration-resistant prostate cancer – failed to hit its primary objectives by not proving any significant success to increase a patient’s survival.

The company said that it had unenrolled in a Comet-2 study following the failure.

Also, because the drug did not prove successful, the company is planning to reduce its workforce by 70%.

What followed was a massive stock decline. The 4.25% convertibles were also pressured, slowly trickling down through Friday trading.

But on Monday, “the bonds have been trying to find their footing again,” a trader said.

He saw the notes trading around 59, which was unchanged from Friday.

Even the underlying stock was attempting to recoup its losses, ending the day up 2 cents, or 1.08%, at $1.87.

Meanwhile, a trader said there was “no trading” in Chiquita Brands International Inc.’s convertible debt as the company postponed an upcoming shareholder meeting on Sept. 17.

The stock, however, dropped 15 cents, or 1.09%, to $13.60, in well above-average trading.

The banana producer had scheduled the meeting to get a vote on its pending merger with Fyffes plc in order to hear a “final and best” offer from Safra Group and Grupo Cutrale.

Safra and Cutrale had previously made an unsolicited $611 million bid for Chiquita, which Chiquita passed over for Fyffes. Fyffes has granted Chiquita a waiver on the vote in order to allow the company time to speak with the interested parties.

The vote is now scheduled for Oct. 3.

Mentioned in this article:

Chiquita Brands International Inc. NYSE: CQB

Exelixis Inc. Nasdaq: EXEL

HSBC Holdings plc NYSE: HSBC

© 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.