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Morning Commentary: Convertibles wane with market; Nuance goes sub-par post-pricing; Citrix slips
By Stephanie N. Rotondo
Seattle, March 14 – Convertible bonds were following the broader markets lower in early Tuesday trading.
In fact, even Nuance Communications Inc.’s new 1.25% convertible senior notes due 2025 – a $350 million deal that priced late Monday with an initial conversion premium of 30% – were not faring well.
A market source saw the issue trading actively, but with a 99 handle.
The company’s 1% convertible notes due 2035 were meantime seen around 94, off half a point.
The underlying equity (Nasdaq: NUAN) was steady at $17.09.
Prior to pricing, a market source said price talk was in the 1% area, with an initial conversion premium of 32.5%. The source said the bonds “modeled rich” at 99.
Away from the new issue, Citrix Systems Inc.’s 0.5% convertible notes due 2019 were losing ground as well, trading down to 123, according to a sellside source.
The stock (Nasdaq: CTXS) was down $3.53, or 4.16%, at $81.20 at mid-morning.
The weakness in both the bonds and the equity was due to a Bloomberg report that said the company had engaged Goldman Sachs Group Inc. to work on a possible sale.
According to the article, it has been difficult to find interested buyers, given the company’s large market valuation.
Market capitalization is $12.7 billion, based on the March 13 closing share price.
The day’s generally softer feel was blamed on the Federal Open Market Committee, which began its two-day policy meeting on Tuesday. Though it is largely expected that the FOMC will opt to increase interest rates this month, investors are taking a pause ahead of the decision, sources reported.
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