General Cable up on potential tender; Gilead jumps on HIV drug; AMR holds on to gains

By Rebecca Melvin

New York, Sept. 17 - General Cable Corp.'s 0.875% convertibles Monday were active and traded up about a point to near par after the Highland Heights, Ky.-based diversified industrial company said it is planning to sell straight notes and that proceeds may be used to tender for the 0.875% convertibles.

Gilead Sciences Inc. moved higher again on Monday, with all three sister convertibles trading in strong volume, on continuing optimism surrounding its HIV drug and a renewed overweight rating by JPMorgan on shares of the Foster City, Calif.-based biopharmaceutical company.

JPMorgan currently has a $75.00 target price on Gilead stock, and shares rallied 6% to trade at $65.80 on Monday.

Navistar International Corp. was mostly quiet but did change hands pre-market at 92.5. Navistar shares subsequently sold off though, so it was unclear if the pricing would hold, sources said.

Bankrupt AMR Corp. saw its convertibles move in line on Monday after jumping 2 to 3 points last week as developments in the Fort Worth, Texas-based carrier's bankruptcy case appeared to continue to pave the way to a link up with U.S. Airways Group Inc.

But overall, the convertible bond market was generally quiet on the heels of aggressive buying last week, a New York-based trader said.

Mondays are typically quieter in the convertibles space, but added to that trend this Monday was the Rosh Hashana holiday, which meant fewer market participants in their offices, and the fact that equities slipped after the rally sparked last week by the Federal Reserve's new policy of quantitative easing that is expected to be ongoing until there is definitive improvement in the U.S. labor market.

General Cable gains

General Cable's 0.875% convertibles due 2013 traded up about a point to 99.875 bid, 100 offered on Monday in a predominantly outright move after the developer, designer, manufacturer, marketer and distributor of copper, aluminum, and fiber optic wire and cable products said that it is offering $550 million senior notes due 2022, which are likely to be used to refinance its 7.125% straight notes due 2017 and 0.875% convertible notes due 2013.

General Cable shares fell 69 cents, or 2.2%, to $31.29 in lighter-than-average volume.

General Cable priced $355 million of the 0.875% convertibles in late 2006, and the seven-year paper matures Nov. 15, 2013.

"That was really active," a New York-based trader said of the 0.875% convertibles, adding that the paper has a slight theoretical delta, but that it trades outright for the most part.

Gilead Sciences jumps

Big stock moves remain on tap for Gilead and their direction is up, which is what convert players have been hoping for.

Gilead's 1.625% convertibles due 2016 jumped to 153.5, which was up 7.4 points on the day, according to Finra's trace data.

Gilead's 1% convertibles due 2014 traded up to 149.062, which was up 9.8 points on the day.

And the Gilead 0.625% convertibles jumped to 172.1, which was up 14 points on the day.

Gilead received regulatory approval for its four-drug combination HIV treatment on Aug. 27, and shares have risen 8% since then. But they jumped another 6% on Monday.

JPMorgan analyst Geoff Meacham expects the company's HIV pill Stribild to emerge as a market leader in three to five years and blockbuster sales of about $2.9 billion in 2015.

AMR climb continues

AMR's 6.25% convertibles due 2014 were seen at 68.25 bid, 69.25 offered on Monday and traded in that range. That's up about 2 to 3 points from last week, a Connecticut-based trader said.

"Every new headline is pushing it higher," the trader said of the AMR debt and bankruptcy and takeover speculation headlines.

Last week, the bankruptcy court approved American Airlines' request to reject the collective-bargaining agreement with pilots and impose cost cuts. The ruling came after the pilots rejected a proposed contract.

The company is trying to exit bankruptcy without a pilot deal, while AMR creditors have a "strong desire" for a consensual agreement between American and the Allied Pilots Association.

Also last week, the bankruptcy court approved new cost-cutting labor agreements with unions of flight attendants and mechanics.

These accords secure part of more than $1 billion in labor expenses that the airline says it has to cut to restructure successfully.

Mentioned in this article:

AMR Corp. Pink Sheets: AAMRQ

General Cable Corp. NYSE: BGC

Gilead Sciences Inc. Nasdaq: GILD

Navistar International Corp. NYSE: NAV

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