Convertibles weaken; SunEdison, Tesla Motors down; PTC Therapeutics pulls off solid debut

By Rebecca Melvin

New York, Aug. 11 – Any strength convertibles achieved on Monday seemed to be wiped away on Tuesday as most of the market was weaker by about 0.25 point on a dollar-neutral, or hedged, basis amid a sell-off in equities following news of China’s surprise move to devalue its currency.

SunEdison Inc.’s convertible bonds, which held in or even expanded on stock losses last week after a disappointing earnings report, seemed to lose their grip on Tuesday with the shares continuing to slide.

The SunEdison 2% convertibles due 2018 traded down to 113 from 124 previously, while shares of the St. Peters, Mo.-based solar technology company fell another 14%.

Tesla Motors Inc.’s 1.25% convertibles due 2021 also traded down and were seen at 91.5 from about 93.5 previously, according to Trace data. Shares of the Palo Alto, Calif.-based electric car maker fell $4.34, or 1.8%, to $236.86.

Considering the very weak broader markets, PTC Therapeutics Inc.’s newly priced 3% convertibles traded well, a New York-based trader said.

The new PTC bonds were bid higher in the early going on Tuesday despite sharply lower common shares after the South Plainfield, N.J.-based pharmaceutical company priced $125 million of seven-year senior notes in an overnight deal at the cheap end of talked terms.

Elsewhere, Exelixis Inc.’s 4.25% convertibles due 2019 traded down to 120 from about 125, with the underlying shares near $5.75, which was down nearly 4% during the session.

The South San Francisco, Calif.-based biotechnology company was set to report quarterly results after the market close. After the close, the company reported a second-quarter loss, and shares were slightly weaker in after-hours trading.

In July, Exelixis announced positive results for a phase 3 trial of a kidney cancer drug that sent its shares surging by 50% and its convertibles up more than 30 points.

Exelixis said the trial comparing cabozantinib to everolimus in 658 patients with metastatic renal cell carcinoma met its primary endpoint.

Tuesday’s financial markets were rattled by news that China moved to devalue its currency. The 1.9% depreciation of the yuan was read as an effort to help its slowing economy by propping up its exports.

Commodities and energy fell, and the major U.S. equity indices were down about 1%. The Dow Jones industrial average fell 212.33 points, or 1.2%, to 17,402.84; the Nasdaq Composite stock index lost 65.01 points, or 1.3%, to 5,036.79 and the S&P 500 stock index fell 20.11 points, or nearly 1%, to 2,084.07.

SunEdison extends slide

SunEdison shares have fallen a full 42% since last week when it posted its weak quarterly results.

The SunEdison 2% convertibles due 2018, or the A tranche, were last at 113, which was down from about 124 on Monday. Early last week the bonds were up at about 164.

Shares of the St. Peters, Mo.-based solar technology company fell $2.24, or 14%, to $13.35 on Tuesday.

The SunEdison 2% convertibles and the SunEdison 2.75% convertibles due 2021, or the B tranche, both were improved on swap last week. The other four issues had fallen in line with the shares.

On Tuesday, the SunEdison 2.75% convertibles were seen at about 112 from 124.

SunEdison’s older 0.25% convertibles due 2020 were last seen down more than 5 points to 75 from about 81.

Meanwhile, the SunEdison 3.375% convertibles due 2025, which is the longer dated of two tranches priced earlier this year in May, fell into the 69 context from about 75 previously. The paper had been at 85 last week.

Last week, SunEdison reported a loss of $263 million, or 93 cents per share, for its second quarter. Losses adjusted to extinguish debt and for asset impairment came to 74 cents. That missed analysts’ estimates of a loss of 45 cents per share.

Revenue came to $455 million, which was up about 5% on the year-earlier period.

PTC pulls off solid debut

PTC Therapeutics’ new 3% convertibles due 2022 traded up slightly from par and were seen at par bid, 100.75 offered near the end of the session.

The new PTC Therapeutics 3% convertibles due 2022 were seen at 100.375 bid with the stock down about 7% at about $40.00, a New York-based trader said earlier in the day.

“PTCT did do well in a weak tape especially with the stock down so much,” the trader said.

That performance was strong given that the shares underlying the bonds were down as much as 10%.

PTC shares closed off their lows for a $39.67 settle, which was down only $3.67 or 8.5%.

The overnight deal priced ahead of the market open at the cheap end of talked terms for a 2.5% to 3% coupon and 30% to 35% premium.

Active bookrunners were Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC, and passive bookrunners were Deutsche Bank Securities Inc. and RBC Capital Markets LLC.

South Plainfield, N.J.-based PTC is a biopharmaceutical company. Its lead product is Translama (ataluren) for the treatment of muscular dystrophy and cystic fibrosis and is in phase 3 clinical trials.

Mentioned in this article:

PTC Therapeutics Inc. Nasdaq: PTCT

Exelixis Inc. Nasdaq: EXEL

SunEdison Inc. Nasdaq: SUNE

Tesla Motors Inc. Nasdaq: TSLA

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