Morning Commentary: Convertibles space off to a ‘Monday’ opening; Pure Storage below par

By Abigail W. Adams

Portland, Me., April 9 – The convertibles space was off to a “Monday” start with not much on the tape early in the session, a market source said.

The new paper that priced last week was slow to trade. While trading volume was light, Pure Storage’s 0.125% convertible notes due 2023 dropped below par.

The 0.125% notes were seen trading in the 99.5 to 99.75 range early in Monday’s session with the stock at $18.64, an increase of 0.87%.

The new 0.125% notes, which priced prior to the market open on Thursday, traded as high as 102 on their market debut but traded down on Friday as the Mountain View, Calif.-based data flash storage company’s stock dropped more than 6%.

While not seen trading early Monday, Pacira Pharmaceuticals’ 2.375% convertible notes due 2022 were up about 1 point dollar neutral on Friday as stock was volatile amid confusion surrounding FDA approval for the expanded use of the pharmaceutical company’s non-opioid medication Exparel.

It appeared that expanded use of the medication received approval on Friday. However, notice of approval was taken off the FDA website after the initial announcement, a market source said.

An FDA advisory panel previously voted against recommending the expanded use of Exparel in February.

It was not until late in the trading session that confirmation of approval was received.

While the 2.375% convertible note was seen up about ¾ to 1 point dollar neutral on Friday, the volatility of stock made it quick to change. “That one’s been kind of wild in the space,” a market source said.

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