Morning Commentary: Tower Group convertibles get better bid; MannKind stock under pressure

By Stephanie N. Rotondo

Phoenix, July 25 – Tower Group International Ltd.’s 5% convertible senior notes coming due Sept. 15 looked to be better bid in early Friday trading.

“It looks like the bonds are going to go higher,” a trader said, seeing the paper at 88 bid, though with no offers.

He noted that the bonds had been trading in an 86 to 87 context “for a couple weeks.”

As for the stock underlying the bonds, that was up 16 cents, or 8.21%, at midday at $2.11.

Tower Group is trying to merge with fellow insurance company ACP Re Ltd. Though investors have had doubts about whether or not the deal – first announced in January – would go through, a trader said the talk was that financing is in place.

Meanwhile, MannKind Corp.’s equity was “down again,” a trader said, following a news story out on Thursday in which hedge fund Tourbillion Capital Partners was reported to say that the stock could drop as much as 90%.

The common shares were down 32 cents, or 3.56%, early Friday at $8.67. As for the 5.75% convertible senior notes due August 2015, there weren’t any trades, according to Trace data, which last placed the issue at 146.75.

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