Convertibles, broader markets drop; Weatherford deal pulled, stock rebounds; biotechs down

By Rebecca Melvin

New York, Sept. 22 – U.S. convertibles were down on Tuesday amid a broad market downdraft, which was led by selling in commodities and which hit convertibles in many areas “across the board,” market players said.

There was higher volume and lower pricing in every area, a New York-based trader said. He was unwilling to single out specific trends or issues.

A cross current to the down trend was funds ready to be put to work after the planned Weatherford International plc mandatory deal was pulled late Monday. The company had been set to price $1 billion of exchangeable subordinated notes and common stock.

The fact that the deal was pulled was not that surprising, one New York-based trader said, “given the [Weatherford] stock moved down 17% yesterday.”

“That is definitely a risk with a move like that,” he said regarding canceling a deal after a tumble in the shares.

Among health care names that saw big drops on Tuesday were Depomed Inc. and Horizon Pharma plc. On Tuesday, Depomed’s 2.5% convertibles dropped to 142.5 to 143 as the common stock fell nearly 13% to $24.18, which was down $3.51.

Horizon’s 2.5% convertibles were seen down at about 113 from about 122 previously, as Horizon shares fell $3.47, or 12%, to $25.52.

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