Morning Commentary: Anacor quiet after pricing through rich end; Microchip drops on sales warning

By Rebecca Melvin

New York, Oct. 10 – Anacor Pharmaceuticals Inc.’s newly priced 2% convertibles were quiet early Friday after the Palo Alto, Calif.-based biopharmaceutical company priced a slightly upsized $75 million of the seven-year senior notes through the rich end of coupon talk and at the rich end of premium talk.

“It seems like the deal saw strong demand and was well placed,” said a trader, who had not seen the bonds in trade after pricing.

Elsewhere, Microchip Technology Inc.’s shares and convertibles dropped sharply after the Chandler, Ariz.-based semiconductor maker warned that its fiscal second quarter revenue will be weaker than expected.

Microchip expects sales of $546.2 million for the second quarter, which includes about $16 million from the recent ISSC acquisition, compared to its earlier guidance for sales for this quarter of between $560 million and $575.9 million, including $18 million from the ISSC acquisition.

The expected revenue drop was attributed to weaker China sales.

Microchip’s 2.125% convertibles due 2037 traded down more than 20 points to 155.7, according to Trace data, from about 179 on Thursday.

Microchip shares were down $5.93, or 13%, at $39.60 in intraday trading on Friday.

The warning weighed on the whole sector, with the Philadelphia Semiconductor Index down 6%.

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