Morning Commentary: PDL BioPharma 4% convertibles drop; two small, new deals in the market

By Rebecca Melvin

New York, Sept. 18 – PDL BioPharma Inc.’s 4% convertible due 2018 was a top trader in the convertibles market early Thursday, and those notes were down 4 points on an outright basis, crossing last at 99.5, according to Trace data.

Shares of the Incline Village, Nev.-based biopharmaceutical company also dropped sharply but had recovered some ground by late morning after the company announced that its independent auditors Ernst & Young LLP resigned effective Sept. 11.

In the release, PDL said it was surprised by the resignation as it did not have any disagreements with the accounting firm on practices, scope or procedures, or any reportable events that would have caused the resignation.

Elsewhere, there was a pair of small, new deals in the convertibles market on Thursday. Violin Memory Inc. launched an offering of $95 million of five-year convertible senior notes that were expected to price after the session close. The notes were talked to yield 4% to 4.5% with an initial conversion premium of 20% to 25%.

Shares of the Santa Clara, Calif.-based computer data storage company sank 10.5%.

Oncothyreon Inc. priced $20 million of series A convertible preferred stock, or 10,000 shares at $2,000 each, in a private offering, along with $20 million of common shares. The common stock of the Seattle-based biotechnology company gained 8.5%.

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