Morning Commentary: Sequenom convertibles jump to par on LabCorp takeover; FXCM eyed

By Stephanie N. Rotondo

Seattle, July 27 – Sequenom Inc.’s convertible bonds were flying higher on Wednesday as Laboratory Corporation of America Holdings announced it was acquiring its smaller rival.

A trader said the Sequenom convertibles – two issues of 5% notes due 2017 and 2018 – jumped to trade at or over par, which compared to levels around 60 on Tuesday.

“Guys were sweating this thing out about whether or not it would ever pay off,” the trader said of the bonds.

When it was trading in the 60s, bids were hard to come by, he noted.

“It’s a good deal for everybody involved,” he said, adding that the market was “satisfied with the deal risk.”

As for the equity underlying the shares (Nasdaq: SQNM), it jumped about 178% to $2.36.

Aside from Sequenom – “the most active name” in early midweek trading, according to a trader – there continued to be a surge in interest in FXCM Inc.’s 2.25% convertible notes due 2018.

“They haven’t traded in many moons,” a trader said. “Then they traded two days ago and again today.”

He saw round-lots trading with a 37 handle and small pieces trading as high as 39.

The stock (NYSE: FXCM), however, was off 12 cents, or 1.23%, at $9.54.

The trader said there really was no reason for the market’s interest to pick up.

“Nothing has changed in that story,” he said. “[Convert holders] are still subordinated to the Leucadia loan. Until that gets taken care of, everybody is at the back door looking in.”

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