Impax Laboratories edges up as shares surge; Ctrip.com lower outright, mixed dollar neutral

By Rebecca Melvin

New York, Aug. 31 – Impax Laboratories Inc.’s convertibles edged up on an outright basis but were seen weaker on hedge on Thursday after news that Shanghai Fosun Pharmaceutical (Group) Co. Ltd. bought a 5.2% stake in the Hayward, Calif.-based company, a market source said.

Ctrip.com International Ltd.’s convertibles were trading lower on an outright basis and were mixed on a hedged, or dollar-neutral, basis after the Shanghai-based travel-services company reported second-quarter results.

Ciena Corp.’s convertibles and shares dropped after the company reported disappointing results that sent shares down 10%.

There was also some trading on the margins as portfolio managers tidied up their ledgers on the last trading day of the month. But trading overall was light as the summer holiday period continued to grind to a close.

Impax edges up

Impax’ 2% convertibles due 2022 moved up about 2 points on an outright basis to around 88, as shares of the specialty pharmaceutical company surged more than 20%.

Shares closed up $3.10, or 17%, to $21.05.

The Impax convertible is referred to as busted, which means it carries a very high premium and has become decoupled from pricing of the shares that underlie the bonds, or broken.

Most trades appeared to have been done on an outright basis and not on hedge, a trader said. But if they were done on hedge, it looked like investors would have lost a bit of money if they were set up on a 50% delta coming into the day, the trader said.

There were many trades in the range of 87.75 to 88.125.

Impax makes branded and generic drugs.

Ctrip.com bonds mixed

Ctrip’s various convertible bond issues were trading mixed after the company posted second-quarter results that included better than estimated earnings.

Ctrip’s 1% convertibles due 2020, or the C tranche, traded at 111.3, which was down 3.4 points on an outright basis and represented a contraction on a dollar-neutral basis, a New York-based trader said.

The Ctrip’s 1.25% convertibles due 2022, or the D tranche, traded at 106.04, which was down 1.6 points. But those convertibles outperformed by a small amount. They were better on a dollar-neutral basis by 0.125 point to 0.25 point, the trader said.

Ctrip’s 1.99% convertibles due 2025 traded at 119.128, which was down 2.6 points

Ctrip’s 1.25% convertibles, or the B tranche, due 2018 were not heard in trade. Those bonds trade at about 5 points over parity and investors rely on volatility in the shares to be able to profit before the issue matures in October 2018.

The American Depositary Shares traded down $2.30, or 4.4%, to $50.39 in the early going. But they pared losses to end down only $1.27, or 2.4%, at $51.45.

© 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.