Convertibles quiet ahead of holiday; Exelixis in line; Softbank/Alibaba mandatories better

By Rebecca Melvin

New York, July 1 – U.S. convertibles were generally firm in light volume on Friday, which was the first trading day of July and the third quarter and the last day before the long holiday weekend in observance of Independence Day.

Exelixis Inc.’s 4.25% convertibles due 2019 traded little changed on swap, or in line with the underlying shares, which were up 2% in the early going. Shares of the South San Francisco, Calif.-based biotechnology company extended gains, closing up 36 cents, or 4.6%, at $8.17. But the bonds came off their highs at around 152.5, and traded late in the day at 148.5.

There is a forced conversion in pricing those bonds, a New York-based trader said regarding the Exelixis convertibles. They are “a month away from a soft call kicking in. 130 threshold.”

In addition, Intercept Pharmaceuticals Inc.’s 3.25% bond, which debuted in the market on Thursday, continued to have a firm bid, a second New York-based trader said.

The new Intercept Pharmaceuticals bonds ended Thursday at 102.75 bid, 103.5 offered against shares at $142.68. Shares of the New York-based biotechnology company closed up on Friday by $3.68, or 2.6%, to $146.68.

Elsewhere, the Softbank Group Corp./Alibaba Group Holding Ltd. mandatory convertibles traded a bit, and were quoted at 102.15 bid, 102.40 offered versus an underlying share price of $79.53 by a New York-based trader.

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