Convertible bond players shuffle paper as stock rise continues; primary remains quiet

By Rebecca Melvin

New York, Oct. 16 – Convertibles players shuffled paper in directionless trade on Monday as the S&P 500 stock index and Dow Jones industrial average reached all-time highs again after a mostly muted session. Bonds slipped.

“There was random shuffling of standard paper,” a New York-based trader said.

The convertibles primary market was quiet again with no new U.S. convertible issues priced yet this month.

Anthem Inc.’s convertibles traded on outright selling, the trader said, adding that the issue is trading less parity so it is not really exciting to hedged players.

Herbalife Ltd.’s convertibles were also trading on no particular news. The Herbalife bonds traded up about a point on an absolute basis to 107 to 107.5 versus an underlying stock price of $79.00. That was about in line, or unchanged on the day.

Intel Corp.’s sister convertibles were also trading. The Intel 3.25% convertibles were below parity by less than 65 cents, and the Intel 2.95% convertibles were in line compared to the previous day.

Ionis Pharmaceuticals Inc.’s 1% convertible bonds traded up more than 2 points on an absolute basis in the early going on Monday, extending a 3-point jump on Friday as shares of the Carlsbad, Calif.-based developer of gene-based therapeutic drugs rose on a regulatory milestone payment from Biogen Inc.

The Ionis convertibles due 2021 traded as high as 118.375 and as low as 116.125 on Monday, which was up from 115.69 on Friday. On Thursday the bond was around 112.

The convertibles were moving in tandem with Ionis shares, which closed up $2.05, or 3.5%, at $61.15, having pared an early gain of 6%.

In the broader markets, the Dow Jones industrial average rose 85.24 points, or 0.4%, to 22,956.96, while the S&P 500 added 4.47 points, or 0.2%, 2,557.64.

Mentioned in this article:

Anthem Inc. Nasdaq: ANTM

Herbalife Ltd. NYSE: HLF

Intel Corp. Nasdaq: INTC

Ionis Pharmaceuticals Inc. Nasdaq: IONS

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