LinkedIn slips on hedge; Aegerion down; Cobalt adds; Anthem to price $900 million deal

By Rebecca Melvin

New York, May 5 – LinkedIn Corp.’s 0.5% convertibles due 2019 were trading actively in the U.S. convertibles market on Tuesday, slipping on both an outright and dollar-neutral, or hedged, basis as market players looked to trim positions amid broader market weakness, trading sources said.

“It’s definitely weaker today. I can’t come up with any good reason for you except maybe there is speculation of new issuance coming down the pipeline and guys are selling ahead of that,” a New York-based trader said.

In fact, Anthem Inc. launched an offering of $900 million of mandatory convertibles after the market close that were seen pricing late Wednesday and were talked to yield 5.25% to 5.75% with an initial conversion premium of 25% to 30%.

Anthem’s 2.75% convertible bonds due 2042, of which a portion will be repurchased with proceeds of the new deal, were very active in trade at about parity, or 208 with the stock at $154.20.

Back in established issues, a second market source said, “There is some market weakness, with some of the small cap being hurt related to earnings.”

Aegerion Pharmaceuticals Inc.’s 2% convertible fell to about 85 from 89 amid a 7% drop in shares of the Cambridge, Mass.-based biopharmaceutical company to $21.74.

Aegerion, with a $621 million market capitalization, reported a quarterly loss, but excluding items, its profit beat estimates. For the year so far, Aegerion shares are up about 10%. But in the last 12 months they are down about 45%.

Cobalt International Energy Inc.’s sister convertible issues expanded about 0.5 point on a dollar-neutral basis with shares of the Houston-based oil and gas exploration and production company off 3.5%. The company reported a quarterly loss that was 2 cents per share less than expected.

It led a generally firmer energy sector, which was boosted by a 2.5% lift in the per-barrel price of West Texas Intermediate crude oil, a Connecticut-based trader said.

Priceline Group Inc.’s convertibles were also in trade amid “good two-way flow,” a sellsider said. All three of the Priceline convertibles were trading actively among different subsets of buyers and sellers.

The Priceline bonds were mostly unchanged with shares of the Norwalk, Conn.-based internet travel services company down less than 1%, he said.

Priceline’s 0.9% convertibles due 2021 changed hands at 99.68, which was down 0.3 point. The Priceline 0.35% convertibles due 2020 traded at 118.39, which was off 0.7 point, and the Priceline 1% convertibles due 2018 traded at 142.25, which was off 1.18 points, according to Trace data.

Priceline shares traded down $9.46, or 0.8%, to $1,258.00.

Tesla Motors Inc.’s convertibles were also said to be near the unchanged mark at the end of the session after trading a little higher in the early going.

Equity markets were also weaker with the Nasdaq stock market down 77.6 points, or 1.6%, to 4,939.33; the S&P 500 stock index down 1%, or 25 points, to 2,089.46, and the Dow Jones industrial average down 142 points, or 0.8% to 17,938.20.

LInkedin slips on hedge

LinkedIn’s convertibles traded at 100.75, which was down nearly 1 point on the day, according to Trace data, with shares of the social media company down a little more than 1% at about $200.00.

Shares of the Mountain View, Calif.-based business-oriented social networking service ended lower by 1.8% at $199.83.

LinkedIn hasn’t recovered since last week when a weak earnings report sent shares down 19%.

The company missed first-quarter estimates amid a deceleration in its recruiters business. It also forecast sales that missed projections for the current quarter and cut annual revenue guidance, citing the strong U.S. dollar and slower-than-projected growth.

Anthem plans $900 million

Anthem, the Indianapolis-based benefits company, said that it plans to price $900 million of convertible equity units at $50 each that were talked to yield 5.25% to 5.75% with an initial conversion premium of 25% to 30%.

Anthem shares ended the session down $1.64, or 1%, at $154.20. But it ticked up to $154.40 in after-hours trade.

Proceeds are expected to be used for general corporate purposes, including repurchase of a portion of Anthem’s outstanding 2.75% convertibles.

Anthem’s 2.75% convertibles traded off about 0.5 point to 208 during the session.

The registered deal has a $135 million greenshoe and was being sold via Credit Suisse Securities (USA) LLC and BofA Merrill Lynch as joint bookrunners.

The units are non-callable and mature in three years. They have full dividend protection via a conversion rate adjustment above $0.625 per quarter. There is a takeout put, including make-whole shares.

The deal is expected to price late Wednesday.

Cobalt expands on hedge

Cobalt’s 3.125% convertibles due 2024 traded late in the session at 78 bid, 78.5 offered, a Connecticut-based trader said.

Cobalt’s 2.625% convertibles due 2019 traded at 77 bid, 77.25 offered.

The Cobalt bonds were better by about 0.5 point on a dollar-neutral basis as Cobalt shares fell 3.5% to $10.21.

The bonds were active on Tuesday and on Monday.

“Energy stuff got a bit better,” the trader said.

Cobalt announced a net loss of $82 million, or 20 cents per share, for the first quarter, compared to a net loss of $57 million, or 14 cents per share, for the first quarter of 2014.

The quarter included $17 million of impairment charges for its previously announced abandoned North Platte #2 appraisal well.

The company said results were hurt by depressed commodity prices and that there was no way to know when they will recover.

Mentioned in this article:

Aegerion Pharmaceuticals Inc. Nasdaq: AEGM

Anthem Inc. Nasdaq: ANTM

Cobalt International Energy Inc. NYSE: CIE

LinkedIn Corp. Nasdaq: LNKD

Priceline Group Inc. Nasdaq: PCLN

Tesla Motors Inc. Nasdaq: TSLA

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