Gilead Sciences active, trading below parity; Priceline off a bit; USEC convertibles flat

By Rebecca Melvin

New York, Aug. 18 –A good chunk of Monday’s U.S. convertibles’ trading was composed of Gilead Sciences Inc., which was trading below parity as Gilead stock notched a new high.

The move seemed related to technicals as sellers in the name appeared ready to put their money to work elsewhere, and there didn’t appear to be any company-specific news that would have moved the securities that much, a Connecticut-based market source said.

Aside from Gilead, which was the single biggest name by volume, recent new issues accounted for the bulk of remaining trade. These names included Priceline Group Inc., AOL Inc. and Jazz Pharmaceuticals plc, a Dublin-based pharmaceutical company.

“It’s been that way for a couple of weeks,” a Connecticut-based trader said, referring to the concentration of trading action in new issues.

A recent spurt in new issuance – attributed to issuers squeezing deals in before summer doldrums – has pushed the new issuance tally for U.S. convertibles for the year so far to $33.8 billion, which is 30% higher than about $26 billion for the same period last year, according to Prospect News data.

The most recent new issue was Priceline’s 0.9% convertibles due 2021, which debuted in the secondary market on Friday. Those notes were seen at 98 bid, 99 offered in early trading on Monday, according to a syndicate source, which was a little lower compared to 98.5 bid, 99.5 where they went out on Friday and compared to the 99 reoffer price at which the paper started.

Elsewhere, USEC Inc.’s distressed 3% convertibles traded actively but were little changed at about the 32.125 mark after news that noteholders have approved the company’s plan of reorganization and a confirmation hearing has been set for Sept. 5. The Bethesda, Md.-based nuclear fuel and service company filed a pre-packaged Chapter 11 bankruptcy plan in the U.S. Bankruptcy Court for the District of Delaware earlier this year.

“They printed a bunch but are trading right about where they had been,” a Connecticut-based trader said of USEC’s convertible paper.

Meanwhile, JinkoSolar Holding Co. Ltd.’s two convertible bonds were quiet after the China solar company reported second-quarter earnings that beat estimates on revenue that was in line with expectations. The company also raised full-year shipment guidance.

“Those bonds rarely trade at all,” the trader said of JinkoSolar’s 4% convertibles due 2019, which priced earlier this year, and the JinkoSolar 4% convertibles due 2016.

Gilead trades below parity

Gilead’s 1.625% convertibles due 2016 were seen up nearly 14 points to 444 on an outright basis, according to Trace data. But that level was below parity by about 1.5 points, a New York-based trader said.

Gilead shares hit a record high and settled up $1.23, or 1.2%, at $100.72.

“Looks like selling to put some money to work elsewhere,” a trader said.

Gilead was a top trader of the day. There were outright sellers into hedge buyers, a trader said.

“There were no news headlines to make them move, but yet they did,” a Connecticut-based analyst said.

On Friday, Gilead rose 3.2% and hit an all-time high after a U.S. arbitration panel ruled in favor of Gilead in a dispute with Roche AG over the rights to its Sovaldi hepatitis C drug. Roche had claimed rights to it last year because of its partnership with Pharmasset before Gilead acquired the company in late 2011.

Priceline slips

Priceline’s newly priced $1 billion of 0.9% convertibles slipped a little in trade on Monday amid slightly higher shares for the Norwalk, Conn.-based online travel company. They were quoted at 98 bid, 99 offered after being reoffered at 99 and ending Friday’s session at 98.5 bid, 99.5 offered.

A New York-based trader said he was seeing only sellers in the Priceline paper on Monday. “Also the leads don’t have to stabilize anymore, so there are no natural bids,” he said.

The Norwalk, Conn.-based online travel company priced $1 billion of the seven-year senior notes at the cheap end of talked terms, including a 99 to 99.25 reoffer price and a 0.75% to 0.9% coupon. It also came at the fixed 60% initial conversion premium that was talked.

Of Priceline’s other convertible issues, the 1% convertibles due 2018 changed hands early Monday at 145.8, which was up about 0.5 point on an outright basis, according to Trace data. The Priceline 0.35% convertibles due 2020 were quiet after having traded late Friday at 119.4.

The $1 billion deal has a $150 million greenshoe and was sold via Wells Fargo Securities LLC and Citigroup Global Markets Inc.

Mentioned in this article:

AOL Inc. NYSE: AOL

Gilead Sciences Inc. Nasdaq: GILD

Jazz Pharmaceuticals plc Nasdaq: JAZZ

JinkoSolar Holding Co. Ltd. NYSE: JKS

Priceline Group Ltd. Nasdaq: PCLN

USEC Inc. NYSE: USU

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