Health care convertibles in focus, weaker; Take-Two jumps outright on game chatter

By Stephanie N. Rotondo

Seattle, Oct. 17 – The convertible bond market was muted on Monday as some desks were empty due to the Sukkot holiday.

Mostly, convertibles were moving in line with the underlying equity.

For instance, Anthem Inc., the Indianapolis-based health care company, saw its 2.75% convertible notes due 2042 falling about 3.5 points outright to 167.175, though the paper eventually recovered a little.

The bonds hit a high of 167.893 by day’s end, according to a market source.

As for the equity, it weakened $2.81, or 2.32%, to $118.28.

PTC Therapeutics Inc.’s 3% convertible notes due 2022 took a hard hit, according to one source, as the Food and Drug Administration denied the company’s appeal on its Duchenne muscular dystrophy drug.

The convertibles dove about 10.5 points to 46.62.

The stock underlying the debt was not much better, as it lost $5.30, or 39.94%, to close at $7.97.

The company had sought to appeal the FDA’s “refuse to file letter,” which the agency usually issues when they find an application lacking information. PTC said it expects it might have to undergo “multiple cycles” of appeal.

Immunomedics Inc., another health care name, was also under pressure as its 4.75% convertible notes due 2022 declined almost 7.5 points to 71.75.

The equity was slightly weaker as well, falling 7 cents, or 3.06%, to $2.22.

There was no fresh news out on the cancer-focused biopharmaceutical company.

The health care sector has been in focus of late and mostly weaker as preliminary quarterly results have shown that the space did not fare so well in the third quarter. There have also been concerns about the 2016 election, especially as the Democratic Party appears to preparing for a sweep.

Take-Two takes off

Take-Two Interactive Software Inc.’s 1.75% convertible notes coming due Dec. 1 jumped in Monday trading, on speculation its Rockstar Games label was getting ready to launch a sequel to 2010’s critically acclaimed “Red Dead Redemption.”

The convertibles were nearly 14 points higher outright at 237.32 at mid-morning. But the debt traded off some by the bell, ending up nearly 11 points at 223.44.

The stock was up $2.16, or 5.06%, at $44.85.

The sequel chatter came after Rockstar tweeted two pictures that appeared to be hinting at a follow-up to the game deemed the best video game of 2010.

As it specifically relates to the 1.75% convertibles, the company said last month it would settle all conversions of the issue entirely in stock. The conversion price is $19.09 a share.

Peabody stays busy

In distressed convertibles, a trader said Peabody Energy Corp.’s 4.75% convertible notes due 2041 continued to be “very active.”

He said the notes traded “between 8 and 9,” adding that there was “possibly some short covering” going on.

Another market source deemed the issue up over 5 points outright at 8.63.

The stock was also performing better, adding 26 cents, or 15.2%, to close at $1.97.

The name has been trending mostly higher of late, helped by the improving cost of coal.

Mentioned in this article:

Anthem Inc. NYSE: ANTM

Immunomedics Inc. Nasdaq: IMMU

Peabody Energy Corp. OTCBB: BTUUQ

PTC Therapeutics Inc. Nasdaq: PTCT

Take-Two Interactive Software Inc. Nasdaq: TTWO

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