Convertibles weaker as stocks sell off; BPZ Resources files bankruptcy; Akorn tumbles

By Rebecca Melvin

New York, March 10 – Convertibles were weaker, with many names for sale, but not much trading on Tuesday as equities and oil prices sagged, market sources said.

“With the Dow down 1.5%, everything is generally for sale from the long-only, outright guys, and things are lower on swap,” a New York-based trader said.

BPZ Resources Inc.’s distressed convertibles slumped even lower after the Houston-based oil and natural gas exploration and production company filed for bankruptcy protection late Monday.

Energy XXI (Bermuda) Ltd.’s 3% convertibles were little changed, however, at 37.5 to 38.5 despite a slide in the underlying shares of the Houston-based energy exploration and production company, and the Energy XXI 5.625% perpetual convertible preferreds were lower at about 46, which was down from 49.

A trader said trading in Energy XXI has been related to the company’s second-lien straight notes offering that priced last week.

Elsewhere, Akorn Inc.’s way-in-the-money 3.5% convertibles came down as shares of the Buffalo Grove, Ill.-based pharmaceutical company dropped sharply following news that Actavis plc is launching a skin cream that will compete with Akorn’s clobetasol cream, a major contributor to Akorn revenue.

Following the Actavis skin-cream news, Akorn reaffirmed full-year guidance, but Jefferies cut its share price target on Akorn to $56.00 from $59.00, and Sterne Agee cut its forecast to $51.00, citing concerns about the potential impact of the rival product.

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