Morning Commentary: Health care continues to improve; BioMarin gains dollar neutral

By Rebecca Melvin

New York, April 7 – Health care continued to be better bid early Thursday in the convertibles market, as improvement in that sector spilled over into the new session from Wednesday, a New York-based trader said.

An obvious focus was seen Wednesday as investors reacted to the news that Pfizer Inc. and Allergan plc scrapped their $160 billion merger plan in the face of new U.S. Treasury Department rules that discourage corporate tax inversions. But health care has seen dollar-neutral gains the last couple of sessions, the trader said.

Among names drawing attention focus on Thursday was BioMarin Pharmaceutical Inc. Shares of the San Rafael, Calif.-based pharmaceutical company, maker of a drug for a rare, genetic muscular dystrophy disease, were lower by nearly 2% at $87.64 in the early going, but the BioMarin 0.75% convertible notes due 2018 were notably higher at 120 to 121, which was up from 117 to 120 previously.

The bonds were seen better by 0.375 point dollar neutral, the trader said.

The BioMarin 1.5% convertible notes due 2020 were last at 121.375 and the BioMarin 1.875% convertibles due 2017 are above triple par. These bonds were not actively traded.

Elsewhere, the Herbalife Ltd. convertible remained well bid after that issue gained a couple of points Wednesday in response to it being added to the Thomson Reuters Convertibles index, a trader said. The inclusion is effective April 13.

The bonds traded firm at par – having moved up from about 98 Wednesday – and the shares were little changed.

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