United Therapeutics prices new issue; EarthLink to redeem 3.25% convertibles; market gains

By Stephanie N. Rotondo

Portland, Ore., Oct. 12 - Convertible bonds were trading better Wednesday as the rest of the market gained strength.

"It feels like there is a slightly better tone to the market," a trader said. "People are getting more confident with converts."

Though he noted that most of the activity was in more liquid investment-grade names, he was "encouraged that people are more confident and being more comfortable with risk."

United Therapeutics Corp. priced a $250 million issue of 1% convertible senior notes on Wednesday, making it the first new issue to hit the market in some time. Though there was "not a lot of color in the Street," according to a trader, the deal was trading near par.

Meanwhile, EarthLink Inc.'s 3.25% convertibles were making the rounds after the company said at a finance conference that it was redeeming the issue in November.

A trader noted that there wasn't much price movement, as the notes were already trading to an upcoming put.

United Therapeutics prices new deal

United Therapeutics priced $250 million of 1% convertible senior notes due Sept. 15, 2016.

A trader said the issue was trading at 100.625 versus a $39.74 stock price, giving it a 70% delta.

Another trader quoted the issue at 100 bid, 100.75 offered.

"It seems like the deal did OK," he said, though he noted that he "wasn't all that impressed by the terms.

"If it's trading this tight, it's not necessarily a good thing," he said. However, he added that it was "what you would expect with this low of a coupon."

United Therapeutics is a Silver Spring, Md.-based biotechnology company.

EarthLink to redeem paper

At Detusche Bank's Leveraged Finance conference in Scottsdale, Ariz., on Wednesday, EarthLink gave a presentation in which it stated that it would be redeeming the 3.25% convertible notes due 2026.

The redemption will take place Nov. 15, according to the presentation documents.

At midday, a trader placed the issue at 99.95.

"They are right around par," another trader said, which was "where they were."

"A put was coming up too, so they were trading to the put," the trader said.

EarthLink is an Atlanta-based internet service provider.

Broad market gains

A trader said that recently beaten down credits were staging a comeback.

"A lot of these names that were beaten up have come back," he said. "The market is better, so you have some confidence."

That confidence was giving Clearwire Corp.'s 8.25% exchangeable notes due 2040 a boost, he said, pegging the issue at 31 bid, 32 offered.

He noted that the notes were trading around 25 on Oct. 10.

Suntech Power Holdings Co. Ltd.'s 3% convertible notes due 2013 were also higher, trading around 51. On Sept. 30, the issue had been trading in a 37.5 to 40 context.

Mentioned in this article:

Clearwire Corp. Nasdaq: CLWR

EarthLink Inc. Nasdaq: ELNK

Suntech Power Holdings Co. Ltd. NYSE: STP

United Therapeutics Corp. Nasdaq: UTHR

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