Teva convertibles soar on Allergan bid; Micron, Intel to hold press event; bonds higher

By Stephanie N. Rotondo

Phoenix, July 27 – Teva Pharmaceutical Industries Ltd.’s 0.25% convertible notes due 2026 dominated Monday trading, according to market sources.

The debt was trading higher after it was announced that the company was making a $40.5 billion play for Allergan plc’s generics unit, allowing it to drop its bid for Mylan NV.

Meanwhile, Micron Technology Inc. and Intel Corp. convertibles were busy and better after the two companies announced a joint press conference for Tuesday.

No details were given as to what the event will be about, but speculation is that it could be in regards to a roll-out of new chips the parties recently collaborated on.

Away from those names, a trader said many convertible market players were attempting to figure out “where this [oil and gas] stuff really is.”

“Nobody really knows,” he said.

For its part, benchmark crude oil fell over 2% on the day.

Teva notes soar

Teva Pharmaceutical’s 0.25% convertible notes popped in active Monday trading after the company announced a $40.5 billion buyout of Allergan’s generic and international business.

The notes rose more than 20 points to 166 bid, 166.5 offered, according to one market source. That was a gain of over 20 points.

Earlier in the session, a trader said the convertible notes were trading at 160 early in the day before moving up to 163.

The company’s equity jumped $10.15, or 16.41%, to 72.

Teva, an Israeli company, will pay $33.75 billion in cash and $6.75 billion in stock for the asset. The acquisition is expected to increase Teva’s place among generic drug manufacturers.

The deal is expected to close in the first quarter of 2016.

On the news, Moody’s Investors Service cut Teva’s senior unsecured ratings to Baa1 from A3, noting that the ratings will remain under review. The downward revision was attributed to Teva’s aggressive financial policies and increased leverage.

Micron, Intel rise

Micron Technologies and Intel convertible bonds were also gaining ground Monday ahead of a press event on Tuesday that is thus far shrouded in secrecy.

Micron’s 3% convertible notes due 2043 were pegged at 91.75 at one desk, a gain of a point on the day. Another source echoed that level but called it a 2-point gain.

Intel’s 3.25% convertible notes due 2039 meantime inched up a point to north of 142.

The stocks, however, ended mixed. Micron closed down 24 cents, or 1.31%, at $18.10, while Intel’s improved 19.5 cents to $28.255.

Neither Micron nor Intel indicated what the press event will be about, but chatter is that it could be about new 3D NAND chips, the development of which the two recently collaborated on. The chips are said to operate better than previous NAND chips, and they have significant costs advantages to multiple mobile devices.

Mentioned in this article:

Intel Corp. Nasdaq: INTC

Micron Technologies Inc. Nasdaq: MU

Teva Pharmaceuticals Inc. NYSE: TEVA

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