Tesaro looks rich at the mids; Salix up in line or better amid M&A talk; SolarCity on tap

By Rebecca Melvin

New York, Sept. 23 – Tesaro Inc.’s planned deal for $165 million of seven-year convertible senior notes was getting a look from market players on Tuesday, and they thought it looked rich based on valuation at the midpoint of talk. Shares of the Waltham, Mass.-based biopharmaceutical oncology company fell through the session and ended down 9%.

Salix Pharmaceuticals Ltd. was active following more takeover news from Allergan Inc. The Salix 1.5% convertibles were up on an outright basis, and depending on delta expanded a bit or were in line.

“That was the only bond that was up today,” a New York-based trader said of Salix. The rest of the universe felt weak, he said, continuing an ongoing trend.

Yahoo! Inc.’s 0% convertibles due 2018 were a feature of trade again, and those bonds recouped a point outright as shares of the Sunnyvale, Calif.-based internet search, content and communications company regained their footing and added 1%. The shares have fallen about 8% since the initial public offering of Alibaba Inc. last week.

After the market close Tuesday, SolarCity Corp. launched an offering of $500 million of five-year convertible bonds under Rule 144A that were expected to price after the market close Wednesday.

The San Mateo, Calif.-based provider of clean distributed energy has an existing $230 million convertible bond with a 2.75% coupon due 2018 that was priced last October.

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