Morning Commentary: LinkedIn adds outright, on hedge; Isis Pharmaceuticals lower outright

By Rebecca Melvin

New York, Feb. 3 – Convertibles trading was driven mostly by company-specific news early Tuesday as equities and crude oil prices rose.

LinkedIn Corp.’s convertibles were higher on an outright basis, and the bond expanded a little bit on swap after Goldman Sachs added the Mountain View, Calif.-based business-oriented social networking service to its Americas conviction buy list and raised its price target on the shares to $280 from $250.

The LinkedIn 0.5% convertible senior notes due 2019 were 106.70 bid, 107 offered against an underlying share price of $229.81, a Connecticut-based trader said.

That was better by 0.125 point on a swap basis, he said. On an outright basis, that level compared to 104.75 bid, 105.25 offered with the underlying shares at $222.00 late Monday.

Isis Pharmaceuticals Inc.’s convertibles traded lower on an outright basis with lower shares after the Carlsbad, Calif.-based gene-based drug developer announced that its experimental antisense drug ISIS-PTP1B Rx achieved statistically significant reductions in body weight and hemoglobin A1c (HbA1c) for type 2 diabetic patients, compared with a placebo at 36 weeks.

Isis’ 1% convertibles due 2021 were quoted at 115 bid, 115.5 offered versus an underlying share price of $63.50. That was down about 6 points on an outright basis, according to Trace data, but up a little on swap, a trader said.

Isis shares sank $5.55, or 8%, to $63.12.

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