Illumina convertibles trade off outright, up on swap; Molina also active; Twitter in focus

By Stephanie N. Rotondo

Seattle, Oct. 11 – Illumina Inc.’s convertible bonds were in focus on Tuesday following the company’s release of preliminary third-quarter results.

“The stock is down $47 today,” a trader noted at mid-morning. He saw the 0% convertible notes due 2019 trading at 98.5 to 99 against a share price of $137.5. The 0.5% convertible notes due 2021 were “trading on a heavier delta, like a 40% delta” at 101.75 to 102.25 versus a share price of $138.75.

After the close, a trader said the 0% convertible notes were a point better on swap but down 7 points outright.

A market source placed the 0% notes just south of par, a loss of nearly 6 points outright. The 0.5% convertible notes were pegged at just north of par, down over 8 points.

The San Diego-based biotechnology company said late Monday that it expects to report revenue of $607 million for the quarter. While that is a gain of 10% year over year, it fell short of the company’s $625 million to $630 million forecasts.

The company also noted that its sequencing instruments sales were down 26%.

Elsewhere in the health care arena, a trader saw Molina Healthcare Inc.’s 1.125% convertible notes due 2020 trading with a 151 handle versus a stock price of $57.90.

At the bell, the convertibles were seen at 149.5, which was unchanged from Friday but weaker than the open.

There was no fresh news out on the Long Beach, Calif.-based managed care company to spark the moves – gains in the debt and weakness in the equity.

The news on Illumina aside, the softness in the health care arena was no big surprise, given that the sector dropped 2.5% overall in the equity market.

Twitter remains topical

Away from Illumina and other health care names, Twitter Inc. “continues to perplex investors on whether a deal with [Salesforce.com] is imminent,” a trader said.

The trader said the social media company’s convertible bonds – the 0.25% convertible notes due 2019 and 1% convertible notes due 2021 – were “bid up” about a quarter-point.

Another source saw the 0.25% convertibles at 94 and the 1% convertibles in a 92.25 to 92.625 context.

The stock meantime gained 44 cents, or 2.51%, to $18.00.

Twitter has been notable – and somewhat volatile – of late since it was reported that the company was expecting to field takeover bids in the coming weeks. But hopes of a takeover from the likes of Google, Disney, Apple or Salesforce.com started to wane after it was reported that most of the potential suitors – including Salesforce.com – had opted not to thrown their hats in the ring.

But on Tuesday, CNBC reported that Salesforce.com was still interested and that talks were continuing. That company’s shareholders have expressed concerns about such a deal.

As for Twitter, its board is also split on whether or not to sell. The company has not provided any information on a back-up plan should a sale fall through.

Mentioned in this article:

Illumina Inc. NYSE: ILMN

Molina Healthcare Inc. NYSE: MOH

Twitter Inc. NYSE: TWTR

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