Yahoo in focus as shares drop; MGM Resorts lower in line; Tesaro on tap in registered deal

By Rebecca Melvin

New York, Sept. 22 – Yahoo! Inc.’s 0% convertibles due 2018 were a focus of trading on Monday as shares of the Sunnyvale, Calif.-based internet search, content and communications company fell sharply on a couple of analysts’ share downgrades.

The Yahoo convertibles moved down another couple of points to around 101.5, compared to 103ish on Friday and 105ish on Thursday.

MGM Resorts International shares were also weak on a downgrade to “market perform” from “outperform” by Wells Fargo, and the convertibles moved lower as well, but looked in line, or flat, with lower shares, a New York-based trader said.

MGM’s 4.25% convertibles due 2015 changed hands at 125.5 near the end of the session, which was down 2.8 points outright, according to Trace data. Earlier the bonds printed at 126.38, which was down 1.9 points on an outright basis, according to Trace.

MGM shares ended lower by 61 cents, or 2.6%, at $22.51.

Concur Technologies Inc.’s 0.5% convertibles remained in trade as well at steady pricing following a jump by about 11 points on Friday on news that German software giant SAP is buying the Redmond, Wash.-based expense management software company.

Sesa Sterlite Ltd.’s 4% convertibles, which mature next month, were pulled into trade on Monday and changed hands at 99.65 to 99.75. That was little changed to down 0.1 point on the day.

The American Depositary Shares of the Indian natural resources company ended up a dime at $18.27.

Trading in the Sesa convertibles may have been precipitated by volatility in commodities on Monday and concerns about China after official comments that it was not likely to implement stimulus policies to boost economic growth. But a New York-based trader said it may also have just been a market player that needed to raise cash.

After the market close, Tesaro Inc. launched an offering of $165 million of seven-year convertible senior notes that was talked at a 2.5% to 3% coupon and a 35% to 40% initial conversion premium.

Yahoo slips again

Yahoo’s 0% convertibles due 2018 were seen late in the session 101.375 bid, 101.5 offered. That was down from 103.25 to 103.5 from Friday.

Yahoo shares fell $2.28, or 5.6% to $38.65.

One trader queried said he hadn’t traded a single Yahoo convertible but that the convertible market overall felt weaker with equities off.

A second trader said Yahoo was trading actively.

The Yahoo bonds were last at 103.25 bid, 103.5 offered on Friday, down from 105 to 106.

That drop was precipitated by sagging shares following pricing of the initial public offering of Alibaba Group, of which Yahoo owns a 22.5% stake.

On Monday, Bank of America Merrill Lynch downgraded Yahoo shares to “neutral” from “buy” but raised its price target to $46 from $40. Bernstein also downgraded Yahoo shares to “market perform” from “outperform” but raised its target to $42 from $40.

Tesaro to price

Tesaro plans to price $165 million of seven-year convertible senior notes after the market close on Tuesday.

Shares of the Waltham, Mass.-based biopharmaceutical oncology company ended the session up a penny and was seen down 0.24% in after-hours trade at $28.61.

The registered deal has a $24.75 million greenshoe and was being sold via joint bookrunners Citigroup Global Markets Inc. and Deutsche Bank Securities Inc., with Leerink Partners, Baird and BMO Capital Markets Corp. acting as co-managers.

In connection with the pricing of the notes, Tesaro plans to enter into capped call transactions with one or more of the underwriters.

Proceeds will be used to fund the capped call transactions and to fund Tesaro product candidates, including rolapitant and niraparib, to carry out Tesaro’s immune-oncology platform strategy, and for working capital and general corporate purposes.

Mentioned in this article:

Concur Technologies Inc. Nasdaq: CNQR

MGM Resorts International NYSE: MGM

Sesa Sterlite Ltd. NYSE: SSLT

Tesaro Inc. Nasdaq: TSRO

Yahoo Inc. Nasdaq: YHOO

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