Teva Pharmaceutical, Nuance launch large deals; existing Teva quiet; market eyes month-end

By Rebecca Melvin

New York, Nov. 30 – Two sizable new issues launched in the U.S. convertibles primary market on Monday, getting things off to a good start for the new month after a dismal November.

Teva Pharmaceutical Industries Ltd. launched a $3.375 billion mandatory convertible preferred deal for pricing on Thursday, and Nuance Communications Inc. launched a $550 million offering of 20-year senior convertible notes for pricing late Tuesday.

That was close to $4 billion of new paper on the advent of December compared to just $443 million of issuance in two deals for the whole month of November.

The Teva deal looked pretty cheap, a Connecticut-based market source said, valuing the new deal at 103.7, using a 2 skew and credit spread of 200 basis points over Libor.

Teva’s existing 0.25% convertible notes due 2026 were not trading very actively given that it was trading at about parity, sources said. One trader said the older Teva bonds remained about a point over parity even though they were lower on an outright basis in tandem with lower shares. According to Trace data, the Teva bond traded around the 150 mark.

Back in secondary dealings, convertibles were pretty quiet. Market players were returning to their desks after the Thanksgiving holiday just in time to mark their books on the last trading day of the month.

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