Morning Commentary: Illumina’s convertible debt remains in focus in wake of weak quarterly results

By Stephanie N. Rotondo

Seattle, Oct. 12 – Illumina Inc. was once again the top trading name in the convertible bond space on Wednesday.

“It’s the only thing trading again,” a trader said. “That’s three days in a row.”

The company’s convertibles dropped 6 to 8 points outright on Tuesday as investors responded poorly to the release of weak preliminary third-quarter results.

The equity underlying the debt was also pressured, losing almost 25% of its market value.

Come the midweek session, the convertibles were mostly unchanged, though there continued to be softness in the stock.

A trader saw the 0.5% convertible notes due 2021 at 102.08 versus a stock price of $139.68. The 0% convertible notes due 2019 were pegged at 99.70 against a share price of $137.25.

The San Diego-based biotechnology company said late Monday that it expects to report revenue of $607 million for the quarter. While that is a gain of 10% year over year, it fell short of the company’s $625 million to $630 million forecasts.

The company also noted that its sequencing instruments sales were down 26%.

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