Midday Commentary: Cobalt International tanks; Orexigen plans $100 million convertible

By Rebecca Melvin

New York, Dec. 2 - Cobalt International Energy Inc.'s 2.625% convertibles dropped in active trade early Monday as shares of the Houston-based oil and gas exploration company fell nearly 15%.

The Cobalt convertibles fell more than 5 points to 94.625, according to Trace data. Shares were down $3.25, or 14.8%, to $18.94.

Cobalt said that it has found more natural gas than expected in its latest Lontra well off of Angola. But having high volumes of gas could offset the value of oil because foreign investors cannot market gas under Angola's production-sharing agreements, according to reports.

Meanwhile, San-Diego based biopharmaceutical company Orexigen Therapeutics Inc. launched a seven-year convertible senior note for $100 million. The deal was seen yielding 3% with an initial conversion premium of 30% at the midpoint of talk. But market sources queried hadn't yet had a chance to value the deal.

BofA Merrill Lynch, Credit Suisse Securities (USA) LLC and Leerink Swann are joint bookrunners of Orexigen deal, with Piper Jaffray & Co. acting as a co-manager.

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