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Morning Commentary: Convertibles secondary market quiet; Kadmon notes in focus early
By Abigail W. Adams
Portland, Me., Oct. 21 – It was another quiet start to the day in the convertibles secondary space with trading volume light as equity markets struggled to find direction.
The Dow Jones Industrial average was down 77 points, or 0.22%, while the S&P 500 index was up 0.04%.
Tech, growth and small cap stocks were outperforming early Thursday, despite a climbing 10-year Treasury yield, which hit 1.675% early Thursday.
The Nasdaq Composite was up 0.42% and the Russell 2000 index was up 0.56% shortly before 11 a.m. ET.
There was $70 million in reported volume about one hour into the session with only two names seeing more than $5 million, a source said.
And one of those names was Kadmon Holdings Inc.’s 3.625% convertible notes due 2027. The 3.625% notes traded up to 150 early in Thursday’s session as stock shot up 8%.
Kadmon’s stock was changing hands at $9.38, an increase of 9.07%, shortly before 11 a.m. ET.
Kadmon’s convertible notes and stock jumped on news that Sanofi was zeroing in on acquiring the biotech company with the waiting period in connection with the acquisition expiring on Oct. 20.
Sanofi announced its intention to acquire Kadmon in early September for $9.50 a share.
The deal is expected to close in the fourth quarter.
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