Convertibles secondary slow; Intercept, Clovis bull run continues; Akamai notes active

By Abigail W. Adams

Portland, Me., Dec. 2 – The convertibles secondary space was off to a slow start on Monday with few names seeing concentrated trading activity.

Many market participants were just getting back and catching up after the Thanksgiving break, a market source said.

With equity markets and Treasuries moving down in tandem, many were also attempting to figure out the direction of the market, another source said.

Equity markets launched the day with gains. However, the Nasdaq, S&P 500 and Dow Jones industrial average all closed the day with losses.

Optimism over a trade deal with China was dampened on Monday after U.S. president Donald Trump reinstated tariffs on steel and aluminum from Argentina and Brazil.

Software growth stocks were taking a hit, a market source said.

Akamai Technologies Inc.’s convertible notes were among the few issues to see concentrated trading activity with the notes down outright with stock off.

While the overall market was down, Clovis Oncology Inc.’s and Intercept Pharmaceuticals Inc.’s convertible notes continued to improve as the bull run in the companies’ stock continued.

While Twitter Inc.’s 1% convertible notes due 2021 were the most active early in Monday’s session, the notes were quiet in the afternoon.

Akamai active

Akamai Technologies’ two tranches of convertible notes were among the most active of Monday’s session with both lower on an outright basis.

The 0.125% convertible notes due 2025 were down 1.75 points outright to 110 in the late afternoon with more than $10 million in reported volume.

The 0.375% convertible notes due 2027 dropped 1 point outright to 98.25 with more than $6 million in reported volume, according to a market source.

Akamai stock traded as high as $86.69 and as low as $84.76 before closing the day at $85.62, a decrease of 1.72%.

Bull run

While the overall market was down, the bull run in Clovis Oncology’s and Intercept Pharmaceuticals’ stock continued on Monday with the companies’ convertible notes improving in kind.

Clovis’ 1.25% convertible notes due 2025 were trading at 60 on Monday. The notes traded as low as 34 as recently as one month ago, a source said.

While not active on Monday, Clovis’ 4.5% convertible notes due 2024 traded up to 157 last week.

The notes were changing hands in the mid-60s in early November.

Clovis stock closed Monday at $16.43, an increase of 10.05%. Clovis stock traded at its 52-week low of $2.93 in late October.

However, speculation the company would be bought out and the recent strength of the biotech sector has helped fuel its rebound, a market source said.

Intercept Pharmaceuticals’ convertible notes also continued to improve as its stock gained.

The 3.25% convertible notes due 2023 were up almost 3 points outright to 97.375.

They were improved about 0.25 point dollar-neutral, a market source said.

While less active, the 2% convertible notes due 2026 traded up to 122 on Monday.

Intercept stock traded as high as $114.43 before closing the day at $112.30, an increase of 3.63%.

Stock has been on an upward trend since last week when the FDA granted priority review for Intercept’s New Drug Application for obeticholic acid, a treatment for NASH, and set a date in March 2020 to review the application.

Twitter trades

Twitter’s 1% convertible notes due 2021 were the most active early in Monday’s session with $3 million on the tape.

However, activity in the notes slowed into the afternoon.

The notes were changing hands at 96.875 with stock off early in Monday’s session.

Twitter’s stock traded as low as $29.97 before closing Monday at $30.42, a decrease of 1.59%.

However, with the notes carrying a large premium, they are not equity sensitive, a market source said.

Twitter’s most recent tranche of convertible notes, the 0.25% convertible notes due 2024, which priced in June 2018, were not active on Monday.

Mentioned in this article:

Akamai Technologies Inc. Nasdaq: AKAM

Clovis Oncology Inc. Nasdaq: CLVS

Intercept Pharmaceuticals Inc. Nasdaq: ICPT

Twitter Inc. NYSE: TWTR

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