Weibo jumps; China Lodging on tap; Depomed eyed as Trump takes aim at ‘opioid crisis’

By Rebecca Melvin

New York, Oct. 26 – Weibo Corp.’s newly priced 1.25% convertibles due 2022 traded up on strong volume on Thursday after the Beijing-based social media company priced an upsized $800 million of the five-year notes at the tight end of price talk.

The new Weibo convertibles were seen changing hands at 103.5 with some $214.7 million bonds having changed hands around mid-session, according to Finra’s Trace data. Trading in the new Weibo convertible accounted for about half of overall volume of convertible bonds at that time.

Meanwhile, Weibo’s American Depository Shares moved up by about 25 cents, or 0.3%, in the early going, but closed down 39 cents, or 0.4%, to $89.96.

A second China-based company broached the U.S. convertibles primary market on the heels of the Weibo deal.

China Lodging Group Ltd. announced plans to price $425 million of five-year convertibles together with an offering of American Depository Shares. The deal was talked at a 0.5% to 1% coupon and a 35% to 40% initial conversion premium, with pricing seen late Thursday.

Shares of the Shanghai-based multi-brand hotel group closed down $5.41, or 4%, at $130.18.

“It’s interesting that these two deals came together when we have had no issuance at all [for October],” a trader said.

Back in established issues, drug makers and benefit companies associated with opioid drugs were in focus after president Donald Trump declared opioid addiction a public health emergency.

A number of those shares traded down on Thursday afternoon, anticipating the push to restrict opioid prescriptions. But Depomed Inc. – an opioid related name – saw its convertibles rebound on Thursday, with the Depomed 2.5% convertible due 2021 trading up about 2 points to 72, after trading down on Wednesday. Shares of Depomed were down 11 cents, or 2.1%, at $5.04 at the close.

A health care convertibles trader said he thought the Depomed moves Wednesday and Thursday were related to the Trump initiative. But he said that he likes Depomed at these levels as a yield name.

Overall the health care space has been softer in the last several days and it remained weak on Thursday, the trader said. Celgene Corp., which is a former convertibles issuer, was down a big chunk and was pressuring the sector.

“It’s taking down the indexes,” the trader said about Celgene. “It’s a $74 billion market cap company and it used to be over $100 billion.”

Celgene shares fell $19.59, or 16%, to $99.97 on Thursday.

Mentioned in this article:

Celgene Corp. Nasdaq: CELG

Depomed Inc. Nasdaq: DEPO

China Lodging Group Ltd. Nasdaq: ADR: HTHT

Weibo Corp. Nasdaq: ADR: WB

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