SunEdison, Aegerion contract sharply on hedge; new Aceto looks cheap, up in gray market

By Rebecca Melvin

New York, Nov. 10 – Earnings news was a catalyst for selling in several convertibles names on Tuesday. The paper of SunEdison Inc. and Aegerion Pharmaceuticals Inc. fell sharply on both an outright and hedged basis, and other names were also victims of swift and decisive selling, including Avid technology Inc., although those bonds were not trading actively, a New York-based trader said.

“There are a lot of landmines out there, and all the smaller issue, unobservable credits are getting trashed,” the trader said.

SunEdison’s complex of convertible bonds were down 3 points on swap across the board after the solar technology company reported a wider-than-expected loss for its third quarter and the common shares collapsed 22%.

The Aegerion 2% convertibles fell 2.5 points to 3 points on swap after the Cambridge, Mass.-based biopharmaceutical company reported mild quarterly numbers, but ongoing unknowns were worrying investors, including the future sales potential of its Juxtapid drug and the potential impact of investigations by the Securities and Exchange Commission and Department of Justice, a trader said.

Meanwhile, Aceto Corp.’s $125 million of five-year convertible bonds were valued at about 103.7, using a credit spread of 475 basis points over Libor and 35% vol. at the midpoint of price talk.

Shares of the Port Washington, N.Y.-based marketer and distributor of pharmaceutical ingredients fell $2.06, or 7.5%, to $25.55 on the heels of the deal launch.

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