China's YY added to pipeline; traders hesitant about Chinese deals; Hologic plans call

By Stephanie N. Rotondo

Phoenix, Nov. 14 - More deals were added to the convertible bond calendar on Thursday.

Early in the day, Chinese social media company YY Inc. said it would sell up to $250 million of convertible senior notes due 2018.

The notes will be convertible into American Depositary Shares, each of which is equal to 20 common shares.

The YY deal came on the back of an announcement from SINA Corp. late Wednesday. SINA, another China-based company, said it was planning to issue up to $600 million of convertible senior notes due 2018.

Both are being done via Rule 144A offerings.

A trader noted that SINA is a well-known company, though he was not overly optimistic about either deals given that NQ Mobile Inc.'s 4% convertible notes due 2018 "worked out so well," he said with sarcasm.

NQ Mobile sold $150 million of the notes on Oct. 9. A couple weeks later, on Oct. 24, Muddy Waters LLC, a Hong Kong-based research firm, alleged that the company was engaged in "massive fraud," an accusation that the company has denied. But the criticism sent the new issue down to around half of par value.

Another trader echoed the negative sentiment.

With Chinese companies, he said "what you see is not necessarily what you get. And there are too many other people that feel the same way."

Risk, Europe driving market

A trader said that while overall liquidity was "a little better" on Thursday, the convertible market remained on the soft side.

In addition to investors being risk-averse, he said he was hearing that the market's weakness was being "driven by Europe. There's been a ton of new issues there and people are selling off to make room [for them]."

Hologic to put, redeem notes

Hologic Inc. said holders of its $405 million of 2% convertible senior notes due 2037 can exercise a put option through Dec. 12.

Earlier in the week, a trader had speculated that the put would soon be announced but that investors were hoping for a sweetener that might offer them an incentive not to put, given how high the bonds were trading. At that time, paper was trading at about 100.30.

After news of the put - as well as a Dec. 18 redemption of any bonds that remain outstanding after the put date on - the notes were seen at 100.07 to 100.08.

The notes will be convertible into common stock until 5 p.m. ET on Dec. 17. The conversion rate is 25.911 shares per each $1,000 of notes, which represents a conversion price of $38.59 per share.

The stock ended Thursday trading at $21.11, up 52 cents or 2.53%.

Hologic is a Bedford, Mass.-based provider of diagnostics products, medical imaging systems and surgical products.

Mentioned in this article:

Hologic Inc. Nasdaq: HOLX

NQ Mobile Inc. NYSE: NQ

SINA Corp. Nasdaq: SINA

YY Inc. Nasdaq: YY

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