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Morning Commentary: Convertibles quiet ahead of central bank news; Ariad Pharmaceuticals in focus
By Rebecca Melvin
New York, Sept. 20 – U.S. convertibles were trading quietly with no new issuance in the primary market on Tuesday as investors appear to be “waiting on the sidelines” ahead of potential news from the central banks of the United States and Japan, a New York-based sellsider said.
“It’s quiet in general. There is still uncertainty and issuers are on the sidelines while guys are just trying to find cheap bonds,” the sellsider said.
Investors are watching for Wednesday’s U.S. Federal Reserve policy statement. It is widely expected that the Fed will leave interest rates unchanged, but the statement and comments following the meeting may provide clues about whether a hike is in the cards for December.
Meanwhile, the Bank of Japan is also on investors’ radars. The expectations there are more mixed ahead of the Bank of Japan’s comprehensive assessment of its expansive stimulus program. Investors question whether the bank will cut its rates further into negative territory, change is bond buying program or signal a shift in monetary policy.
One name getting a look in convertibles was Ariad Pharmaceuticals Inc. Its common shares were up in early trading, and the convertible, which doesn’t usually trade actively, was getting a look following news late Monday that Allergan plc has agreed to buy Tobira Therapeutics Inc. in a deal worth about $1.7 billion.
The price tag for the Tobira, a biopharmaceutical company, was deemed expensive, and Allergan shares were lower in the aftermath.
The Ariad convertible was quoted at about 152. Ariad shares were up 84 cents, or 7%, at $12.95.
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