Medicines adds on hedge in busy trade; Resource Capital slips from discounted offer price

By Rebecca Melvin

New York, Jan. 8 – The Medicines Co.’s newly priced 2.5% convertibles traded up on Thursday after the Parsippany, N.J.-based health care company priced an upsized $350 million of the seven-year senior notes at the rich end and midpoint of talked terms.

The bond appealed to market players because it’s a health care name, the vol. is good and it carries a “decent” coupon.

“It’s a hot sector, the stock is volatile, and it has a decent coupon considering the Treasury rate,” a New York-based source said.

The new bond was seen around 102 with the underlying shares at about $24.90. Medicines’ older convertible bonds also “held their own” after coming in a little bit on Wednesday, the source said.

But Resource Capital Corp.’s newly priced 8% convertibles traded down to 98.25, according to Trace data, after being offered at a discount to par of 99. The deal for $100 million of five-year notes priced beyond the cheap end of initial talk for a 7% to 7.5% coupon.

It didn’t do well, sources said, because it’s a sector that is out of favor.

“There is too much REIT paper in the convert universe,” a New York-based trader said.

Market players were also sizing up a $500 million deal that Brocade Communications Systems Inc. launched late Wednesday. But no color on this deal emerged ahead of terms being fixed. Brocade shares added 39 cents, or 3.4%, to $11.80 during the session.

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