NuVasive paper falls on jury verdict; Suntech weak; Hologic pressured by 'large seller'

By Stephanie N. Rotondo

Portland, Ore., Sept. 22 - Weak was the tone of the convertibles market Thursday as fear and uncertainty about the global economy reigned.

"A lot of people are just fixated on watching their screens," a trader said. He remarked that many investors were taking the "sell first, ask questions later" approach.

"It's not too good," said another trader. "Most things are down."

Still, another trader noted that volume was "more so than other days" and that "most converts held in OK. They didn't really sell off as much as the bond market."

NuVasive Inc.'s convertibles were seen selling off again on Thursday. The bonds had begun losing weight on Wednesday after the company was slapped with a $101.2 million verdict against them in a patent infringement case filed by Medtronic Inc.

Also continuing to fall were Suntech Power Holdings Co.'s convertibles.

Meanwhile, a trader reported that a large seller had put pressure on Hologic Inc.'s paper early in the session. But the convertibles managed to climb back up to end slightly softer.

Also, Hertz Corp.'s convertibles were "a little heavier," according to a market source, as recession fears caused some to wonder if car rentals might experience a slump. Still, the source noted that the decline could be related to short supply and that the issue was relatively attractive.

NuVasive loses ground

A trader said NuVasive's 2.75% convertible notes due 2017 were "under more pressure," as investors continued to react to the $101.2 million jury verdict against them in Medtronic's patent infringement case against them.

Another trader said the issue "continued to sell off."

"On a dollar-neutral basis, the bonds came in a little bit," he said, seeing the paper trade at 86.25 versus a stock price of $18.55.

He called that down about a point.

Medtronic brought the suit against NuVasive, alleging that the company had infringed on three of its patents related to spinal implants. NuVasive has said that it intends to "aggressively challenge this verdict."

Suntech under pressure

Concerns about the solar industry as a whole has weighed on Suntech's convertibles recently, and Thursday was no different, according to a trader.

"Those have been taking a pounding," he said of the 3% convertibles due 2013. The notes fell to 51 from 54 previously.

"The bonds are not holding at all," he added. "The credit is melting in these [solar companies]."

He noted that the convertibles were trading at a 60% yield to maturity and that the stock was down considerably.

The stock dropped 21 cents, or 7.19%, to $2.71 on Thursday.

Hologic sees big seller

A trader said that a "large seller" came in and pressured Hologic's 2% convertible notes due 2037 early in the session, dropping levels to around 93.875.

Soon after, however, he said the paper was pushed back up and then back down, finally closing around 94.375.

He called that down a quarter- to a half-point on the day.

Another trader said the convertibles were initially down half a point, then came back to end about unchanged at 94.25 bid, 94.75 offered.

Hertz slips

Hertz's 5.25% convertibles due 2014 closed down some to around the 128 mark, according to a market source.

A trader said that while the issue was "a little heavier," he added that it could be a supply issue.

"They really are a nice place to be," he said.

"It's a high dollar-price bond," said another trader. "It's going to trade with a high dollar price to the stock."

The stock, for its part, dropped 91 cents, or 9.22%, to $8.96 on Thursday.

Mentioned in this article:

Hertz Corp. NYSE: HTZ

Hologic Inc. Nasdaq: HOLX

NuVasive Inc. Nasdaq: NUVA

Suntech Power Holdings Co. NYSE: STP

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