Morning Commentary: Microchip convertibles in focus post-earnings; Ligand notes improve

By Abigail W. Adams

Portland, Me., Nov. 8 – Earnings-related stock moves continued to dominate trading activity in the convertibles secondary space on Thursday.

After several large price movements during Wednesday’s session, focus shifted on Thursday toward Microchip Technology Inc.’s convertible notes.

The semiconductor company’s 1.625% convertible notes due 2027 jumped more than 4 points outright to trade up to 102.375, according to a market source.

More than $12 million of the bonds were on the tape late in the session.

While less active, Microchip’s 1.625% convertible notes due 2025 jumped 9 points outright to 144.375.

Microchip stock was up 6.5% early Thursday after the company reported second-quarter earnings.

Microchip reported non-GAAP earnings per share of $1.81 versus analyst expectations for earnings per share of $1.74. Revenue of $1.51 billion was in line with estimates.

Meanwhile, Ligand Pharmaceuticals Inc.’s 0.75% convertible notes due 2023 saw a slight improvement on an outright basis with stock up after an earnings beat.

The notes, which saw a steep sell-off in October, were up 2 points outright to 97.5 with more than $8 million of the bonds on the tape. Ligand stock was up more than 4% early in Thursday’s session.

Ligand reported earnings per share of $1.32 for the third quarter compared to analyst expectations for earnings of 99 cents a share.

The biopharmaceutical company reported revenue of $45.66 million versus analyst expectations for revenue of $41.70 million.

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