Convertibles quiet; Blackhawk drags outright, dollar neutral; PTC Therapeutics moves up

By Rebecca Melvin

New York, Sept. 19 – Blackhawk Network Holdings Inc.’s 1.5% convertibles were down on an outright basis and contracted on a dollar-neutral, or hedged, basis by about 0.25 point on Monday as the common stock of the Pleasanton. Calif.-based prepaid, gift card and payments services company traded off, a New York-based trader said.

The Blackhawk convertible was 93.75 bid, 94.25 offered at the end of the session when shares were near their $29.04 closing mark, which was down $1.29, or 4.3%, on the day, the trader said.

Otherwise, the convertibles market got off to a relatively quiet start on Monday with tepid secondary market action and no new issues launched or priced in the primary market, a second New York-based trader said.

There was some continuation of Friday’s action. Intel Corp.’s two convertible bonds, which were actively traded on Friday, traded actively again, but eased back in line with the lower common stock after Friday’s rally. Friday’s move was sparked by the Santa Clara, Calif.-based semiconductor company’s upwardly revised third-quarter revenue guidance.

One trader said that market players are motivated by a potential call price in the Intel 2.95% convertibles.

As for the Intel news, the chipmaker said that it now expects third-quarter revenue of $15.6 billion, plus or minus $300 million, which is up from a previous range of $14.9 billion, plus or minus $500 million, and well above the company’s 2015 third-quarter revenue.

Intel also boosted its gross margin forecast by two percentage points. The company attributed the improved forecast on moves by hardware makers to replenish finished PC and component inventories and seeing signs of improving PC demand.

The Intel 2.95% convertibles traded last at 136.85, which was down about 0.75 point from Friday on an outright basis. Intel’s 3.25% convertibles traded at 181, which was down about 0.5 point, but still higher than where they stood before the upwardly revised third-quarter forecast. Intel shares traded down 51 cents, or 1.4%, to $37.16 after trading up 3% at $37.67 on Friday.

Novavax Inc.’s 3.75% convertibles, which careened lower on Friday, were not heard trading on Monday, a New York-based trader said. But PTC Therapeutics Inc.’s 3% convertible was in focus and added about 7 points on an outright basis in tandem with a higher common stock price for the South Plainfield, N.J.-based pharmaceutical company. That move was in reaction to regulatory approval granted to Sarepta Therapeutics Inc.’s Eteplirsen drug, a trader said.

Sarepta’s Exondys 51 to treat patients with Duchenne muscular dystrophy was granted FDA fast track designation, which facilitates development and expedites the review of drugs that are intended to treat serious conditions and that demonstrate the potential to address an unmet medical need. It was also granted orphan drug designation.

There were various other names in trade. Ctrip.com International Ltd.’s recently priced 1.25% convertible continued to trade mostly in line at slightly under par, or at 98.875 bid, 99.375 offered.

Equities markets fluctuated and ended little changed on the day as markets await the next policy announcement of the Federal Reserve, scheduled for Wednesday. The U.S. central bank is expected to hold interest rates steady for now with a rate hike still in the cards for December.

Blackhawk contracts

Blackhawk Network’s 3% convertibles due 2022, of which $500 million priced this summer, were seen trading at 94.5 bid, 95 offered on Monday, and then down at 93.75 bid, 94.25.

The Blackhawk common stock close of $29.04 represented a 52-week low.

On a dollar-neutral basis, the convertibles were down 0.25 point. The common stock fell 4.3% to $29.04.

The $1.7 billion market cap company was the subject of an article that wasn’t upbeat on the prepaid card business, a New York-based trader said. “I think guys are just throwing in the towel.”

Blackhawk priced the convertible notes on July 21. The proceeds of the deal were earmarked to repay borrowings under its credit facility, to repurchase shares of the company’s common stock from certain purchasers of the notes, to pay the net cost of the convertible note hedge transactions, to pay related transaction fees and expenses, and for general corporate purposes, including future acquisitions.

Up to $35 million of the net proceeds were used to repurchase common shares in privately negotiated transactions concurrently with the offering of notes.

PTC Therapeutics gains

PTC Therapeutics 3% convertibles were indicated up to 52.84 on Monday from 45.85 previously, according to a pricing source.

PTC shares surged $1.88, or 21%, to $10.99.

PTC, which has a drug to treat Duchenne muscular dystrophy and cystic fibrosis, moved up in sympathy with fast-track regulatory designation of Sarepta’s muscular dystrophy drug.

The outsized moves in the biotech sector the last few days were noted by one trader, who said, “You had Novavax down 90% on Friday and you have Sarepta up 80% today, it shows what you have to live with in this sector.”

Serepta closed up $20.79, or 74%, to $48.94.

Novavax’s convertible plunged to the low 40s on Friday after the Rockville, Md.-based biotechnology company reported that trials for its RSV respiratory disease vaccine candidate had failed. On Monday, the common stock bounced off its lows and was up 20 cents, or 15.5%, to $1.49.

Mentioned in this article:

Blackhawk Network Holdings Inc. Nasdaq: HAWK

Ctrip.com International Ltd. Nasdaq: ADR: CTRP

Intel Corp. Nasdaq: INTC

Novavax Inc. Nasdaq: NVAX

PTC Therapeutics Inc. Nasdaq: PTCT

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