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.

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.

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