Neurocrine Biosciences convertible notes gain; Ares Capital, Western Digital active

By Abigail W. Adams

Portland, Me., Sept. 14 – The convertibles primary market was quiet on Monday although sources expect an active week for new deal activity if equity markets continue to rebound.

After a volatile week, equities launched the week on firm footing with a slew of merger and acquisition activity driving the market higher.

While the convertibles secondary space was firm on Monday, trading volume was light with $62 million in reported volume about one hour into the session and $352 million on the tape about one hour before the market close.

The M&A activity that boosted the market prompted trading activity in some outstanding issues.

Western Digital Corp.’s 1.5% convertible notes due 2024 were active with stock up alongside the broader semiconductor sector following news of Nvidia Corp.’s acquisition of ARM Ltd. from Softbank.

The biotech sector was also given a boost by Gilead Sciences Inc.’s acquisition of Immunomedics Inc.

While the stock of several biotech convertible issuers gained on the news, Neurocrine Biosciences Inc.’s 2.25% convertible notes due 2024 were the only notes to trade in volume.

Ares Capital Corp.’s convertible notes also saw high-volume activity on Monday although the activity was most likely the result of a portfolio rebalancing.

Western Digital active

Western Digital’s 1.5% convertible notes due 2024 were active on Monday with the notes making nominal gains.

The 1.5% notes traded up about 0.75 point outright.

There were some large trades in the notes at 96.375. However, there were also some odd lot trades as high as 97, a source said.

The notes saw more than $10 million in reported volume by the late afternoon.

Western Digital stock traded to a high of $39.00 and a low of $38.00 before closing the day at $38.94, an increase of 4.2%.

Stock gained alongside the broader semiconductor sector after Nvidia announced it would acquire ARM Ltd. from Softbank in a cash-and-stock deal valued at $40 billion.

Neurocrine gains

Neurocrine Biosciences’ 2.25% convertible notes due 2024 were on the rise on Monday as stock soared alongside the broader biotech sector.

The 2.25% notes gained about 4 points outright with stock up more than 6% in intraday activity.

The notes traded up to 147 on Monday and were improved dollar-neutral, a source said.

The 2.25% notes saw more than $10 million in reported volume.

Neurocrine stock traded to a high of 108.16 and a low of 101.07 before closing the day at 106.03, an increase of 5.62%.

The entire biotech space was “rocking” on Monday following Gilead’s acquisition of Immunomedics, a former convertible issuer, a source said.

While the stocks of several convertible issuers in the sector were on the rise, Neurocrine’s 2.25% convertible notes were the only issue to trade in volume.

In addition to the general strength of the sector, the biotech company announced that its previously approved add-on treatment for Parkinson’s Disease ONGENTYS was now available in the United States.

The drug’s commercial launch had been delayed due to Covid-19.

The company also recently released positive data from a gene therapy treatment for Parkinson’s Disease in development.

Ares eyed

Ares Capital’s 4.625% convertible notes due 2024 and 3.75% convertible notes due 2022 saw heavy volume on Monday.

The 4.625% notes were changing hands around 103.75 with about $10 million in reported volume, a source said.

The 3.75% convertible notes continued to trade around 102.5 with $5 million on the tape.

Ares Capital stock traded to a high of $14.33 and a low of $14.09 before closing the day at $14.25, an increase of 0.56%.

Stock began trading ex-dividend on Monday with a dividend payment of 4 cents to be disbursed on Sept. 30.

While ex-dividend dates have an impact on equity-sensitive convertible notes, Ares Capital’s convertible notes are not equity sensitive, a source said.

The activity in the notes was most likely the result of a portfolio rebalancing with holders moving from one issue to the other.

Mentioned in this article:

Ares Capital Corp. Nasdaq: ARCC

Neurocrine Biosciences Inc. Nasdaq: NBIX

Western Digital Corp. Nasdaq: WDC

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