Morning Commentary: Restoration Hardware deal quiet in the gray; Synergy spikes on positive data

By Rebecca Melvin

New York, June 17 – There was no gray market yet on the planned Restoration Hardware Holdings Inc. convertible deal, which was expected to price after the market close on Wednesday, market sources said.

The deal, which was subject to three-day marketing, was still talked at a 0.125% coupon and a 27.5% initial conversion premium at the midpoint of talk. But one source said he was hearing the deal was having a difficult time at current pricing.

The overall convertibles market is weak, which is likely the reason that the deal was struggling a bit, the source said.

A second market source said he heard the Restoration deal at “plus 2” offered, but no bid.

Elsewhere, Synergy Pharmaceuticals Inc.’s stock spiked by as much as 50% at late morning, and the convertibles were significantly higher, after the New York-based biopharmaceutical company announced positive phase 3 trial results for its plecanatide constipation drug.

The Synergy 7.5% convertibles due 2019 were active, a trader said, quoting the paper at 217.125 bid, 219.125 offered, with the underlying shares at $6.75.

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