Morning Commentary: Convertibles quiet ahead of holiday weekend; Exelixis trading in line

By Rebecca Melvin

New York, July 1 – U.S. convertibles were trading quietly early Friday on the first day of the month and the last day before the long holiday weekend in observance of Independence Day.

Exelixis Inc.’s 4.25% convertibles due 2019 saw a little bit of activity, but they looked like they were trading little changed on swap, or in line with the underlying shares, which were up 2%., a New York-based trader noted. The shares were last up 26 cents or 3.3%, at $8.07.

There is a forced conversion in pricing those, a second New York-based trader said regarding Exelixis. They are “a month away from soft call kicking in. 130 threshold.”

In addition, Intercept Pharmaceuticals Inc.’s 3.25% bond, which debuted in the market on Thursday, continued to have a firm bid, a trader said.

The new Intercept Pharmaceuticals bonds ended Thursday at 102.75 bid, 103.5 offered against shares at $142.68.

Overall, however, there is really nothing going on, the trader said.

“I really think that people packed it in two days ago with the end of the quarter and now with the long holiday weekend, I would be really surprised if anyone did anything,” the trader said.

In the broader markets, U.S. equities were up for a third straight day, trading fractionally higher.

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