Convertible bond investors stick with the usual suspects; EZCorp rises; Medicines better

By Stephanie N. Rotondo

Seattle, July 11 – A convertible bond trader said it was “more of the same” in early trading on Monday.

“It’s all the same names,” he said, such as Intel Corp. and Weatherford International plc. The trader also noted that liquidity remained constrained. He attributed the weak activity to it being summer.

“And we still have a long eight weeks to go,” he remarked.

In trading, Intel’s 2.95% convertible notes due 2035 were inching up about a point to a 131 to 132 context, according to a market source. The 3.25% convertible notes due 2039 were meantime nearly 2 points higher, trading with a 169 handle.

As for Weatherford, is 5.875% convertible notes due 2021 added about 1.25 points to close at 110.

Both Intel and Weatherford saw their equity rising as well. Intel’s stock traded up 38 cents, or 1.12%, to $34.38, while Weatherford added a penny to close at $5.37.

A trader did say that EZCorp Inc. was a notable name. Last week, the company announced that it was selling off its Grupo Finmart business, a unit that makes consumer loans to employees of the Mexican government.

EZCorp will receive $50 million in cash from the transaction.

When the news was first announced on Wednesday, it resulted in a 16% jump in the equity. Those gains continued through the week, and a trader said the stock was “continuing its advances today,” pushing up above $9.00 a share.

He added that the equity has not traded at these levels in over a year.

On Friday, the company’s 2.125% convertible senior notes due 2019 pushed up to an 88.5 area, the trader said. While there was not yet much action in the bonds in early Monday trading, he opined that they were likely trading around 89.5.

“The bonds had traded back down to the 60s and now they are back around 90,” he said.

By midday, the bonds were trading at 89 bid, 89.5 offered versus a stock price of $9.16.

The stock ended up finishing even higher than that, putting on 27 cents, or 3.01%, to close at $9.24.

Take your Medicines

The Medicines Co.’s convertible bonds were trading on the active side, ticking higher with the equities.

A market source saw the 2.75% convertible notes due 2023 gaining nearly 3 points on the day to finish around 100.5. The 2.5% convertible notes due 2022 improved over 4 points to around 125.5.

As for the stock, it gained $1.29, or 3.7%, to close at $36.19.

A trader attributed the gains to headlines that indicated the company – a Parsippany, N.J.-based pharmaceutical company – had won the right to fight to block Hospira’s proposed use of generic AngioMax.

Hospira had previously filed two abbreviated drug applications with the U.S. Food and Drug Administration for the drug. Hospira claimed that because of a contract manufacturing organization agreement, Medicines Co. had forfeited its patent on the drug.

Initially, the courts agreed with Hospira. However, in a ruling out Monday, the U.S. Court of Appeals for the Federal Circuit overturned the previous decision, noting that the services Medicines Co. received were for manufacturing and did not include a sale of the patented product.

Mentioned in this article:

EZCorp Inc. Nasdaq: EZPW

Intel Corp. Nasdaq: INTC

Medicines Co. Nasdaq: MDCO

Weatherford International plc NYSE: WFT

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