Morning Commentary: Convertibles market settles down; ‘rough tape’ for recent biotech deals

By Abigail W. Adams

Portland, Me., Feb. 2 – Friday morning was quiet in the convertibles space as the market settles down after a mid-week traffic jam of new paper entering the space.

The flurry of activity surrounding Western Digital Corp.’s new 1.5% notes due 2024 has slowed with the market returning to normal.

“There’s nothing out of the ordinary today,” a market source said.

While Western Digital’s 1.5% notes expanded on debut and have maintained their strength, recently priced deals from biotechnology names have not been so lucky.

Alder BioPharmaceuticals, Inc.’s 2.5% convertible notes due 2025, Insmed, Inc.’s 1.75% convertible notes due 2025, and Exact Sciences’ 1% convertible notes due 2025 are all languishing below par.

While there has been minimal trading of Senseonics Holdings Inc.’s small offering of 5.25% convertible notes due 2023, those notes are also below par, a market source.

“It’s certainly a rough tape with all of these new issues under par,” a market source said.

While the “tape has been weak,” it is not necessarily a foreboding sign for the future, the source said.

“People have forgotten what down days look like. There’s a little bit of volatility and people get panicky,” the source said.

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