Morning Commentary: Greenbrier deal set to price; Teva convertibles in decline as patents nixed

By Stephanie N. Rotondo

Seattle, Jan. 31 – Convertible bond trading remained muted early Tuesday as the common stock market remained under pressure.

The Dow Jones industrial average was off around 150 points as of mid-morning, retreating farther away from the 20,000-mark hit last week.

In the primary space, investors were looking toward the Greenbrier Cos. Inc.’s planned $175 million sale of convertible senior notes due 2024.

The deal – which was first announced on Monday – was talked at a 3.25% to 3.75% yield and an initial conversion premium of 30% to 35%.

The deal was expected to price after the market closed on Tuesday via Goldman Sachs & Co. and BofA Merrill Lynch. Ahead of pricing, the company’s stock (NYSE: GBX) was off $3.35, or 7.39%, at $42.00.

Meanwhile, Teva Pharmaceutical Industries Ltd.’s 0.25% convertible notes due 2026 were losing ground in the wake of news that a U.S. District Court had invalidated four patents tied to its Copaxone drug, a treatment for multiple sclerosis – and the company’s largest revenue generator.

The convertibles were seen trading around 107 in early dealings, off 1 to 2 points. The underlying equity (NYSE: TEVA) was also lower, falling $1.66, or 4.81%, to $32.86.

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