Convertibles mostly name driven; Ctrip.com trades up with shares; Medicines moves around

By Rebecca Melvin

New York, Aug. 30 – The U.S. convertibles market was mostly “name driven” on Wednesday as market players eyed month end on Thursday and then the upcoming Labor Day holiday, which was expected to quiet activity heading into the long weekend, market sources said.

Ctrip.com International Ltd.’s convertibles were trading up in tandem with a lift in the underlying shares of the Shanghai-based travel company ahead of the company’s second-quarter results expected to be released late Wednesday. Ctrip also has a convertible issue – the 0.5% convertible – which matures next month and has been trading well above double par.

On Wednesday, the Ctrip 1% convertibles due 2020 traded up to 114.4 from 113.7.

The Ctrip 1.99% convertibles due 2025 traded up at 121.7 from 120.38. And the Ctrip 1.25% convertibles due 2018 were a little higher on an outright basis at 137.5.

The American Depositary Shares traded up 56 cents, or 1.1%, to $52.72 on Wednesday. In after-hours action – ahead of the results – the shares were off 32 cents, or 0.6%, at $52.40.

Medicines Co.’s convertibles were in focus and were initially trading better before moving back to about the unchanged mark, a New York-based convertibles sellsider said.

Shares of the Parsippany, N.J.-based biopharmaceutical company also slipped in early trading after jumping in the premarket after the company announced that the Food and Drug Administration has approved its injection for adults with complicated urinary tract infections, including kidney infection. The injection, Vabomere, is a drug containing meropenem, an antibacterial, and vaborbactam, which inhibits certain types of resistance mechanisms used by bacteria.

The Medicines 2.75% convertible notes due 2023 jumped up to about 106.50 bid, 106.875 offered, which was up at least a couple of points from many prints on Tuesday. The Medicines 2.5% convertible due 2022 was up at 132.6 early Wednesday, compared to Tuesday’s close at 131.3, according to Trace data.

Shares closed down $2.31, or 6%, at $36.43.

In economic data, the U.S. Commerce Department said on Wednesday that gross domestic product rose at a seasonally and inflation-adjusted annual rate of 3% in the second quarter. That was the strongest quarter in more than two years, and some forecasters expect growth will remain around that pace in the third quarter.

Details of the Commerce report showed the strongest consumer-spending growth in a year, with household outlays up at a 3.3% annual pace, up from a 1.9% rate in the first three months of the year.

But Hurricane Harvey, which has devastated Houston, the country’s fourth most populous city with flooding caused by a record-breaking 50 inches of rain in less than a week, could cause some volatility in economic indicators for the second half of 2017. Experts see the potential for reduced third-quarter growth and increased economic activity in the fourth quarter due to this storm.

Mentioned in this article:

Ctrip.com International Ltd. Nasdaq: ADR: CTRP

Medicines Co. Nasdaq: MCDO

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