NuVasive seen as interesting story despite Medtronic issues; aircraft, airline space busy

By Stephanie N. Rotondo

Portland, Ore., Sept. 23 - Convertibles fared better on Friday, though most of the activity in the market was "a lot of the bigger names," a trader said.

"It seems as though [convertibles] found a floor or leveled off," he said.

He also noted that there was opportunistic buying in "real credit companies" - that is, companies with good balance sheets and companies that make money.

"There's quite a few interesting names in converts right now," he added. Specifically, he pointed to NuVasive Inc.

NuVasive has been in headlines this week, as the company was slapped with a $101.2 million jury verdict in a patent infringement lawsuit brought by Medtronic Inc.

"There are buyers out there," he said of the company's convertbles.

Meanwhile, the airline and aircraft space was getting some attention. AAR Corp.'s convertibles were trading around par after the company filed its 10-Q and AMR Corp. and United Continental Holdings Inc. were also moving around.

NuVasive 'interesting'

A trader deemed NuVasive an "interesting name" and said that buyers for the 2.75% convertible notes due 2017 were making the rounds.

"There's just been a change in hands," he said. Those willing to buy the paper were those who thought the company still had a good story.

The trader saw the convertibles trading at 86.875 versus a stock price of $19.10.

Earlier in the week, NuVasive lost the first round in its patent infringement fight with Medtronic. A jury awarded Medtronic $101.2 million in damages. NuVasive has said it will fight the verdict.

Airline convertibles busy

AAR reported earnings Friday for the three months ended Aug. 31.

A trader saw the 1.75% convertible notes due 2026 trading at par bid, par ½ offered, versus a stock price of $17.30.

For the three-month period, the aircraft reseller reported sales of about $328 million, up from $281.7 million the year before. Net income rose to $16.65 million from $13.67 million in 2010.

Among other airline convertibles, AMR's 6.05% convertible notes due 2014 were trading at 67 versus a stock price of $3.30, according to a market source.

The source also saw United's 6% convertible notes due 2029 at 249 compared to $20.50 in the stock.

Weak credits weaken more

A trader said that "weaker credits have just gotten weaker."

Such was the case for Hutchinson Technology Inc.'s 8.5% convertible notes due 2026, he said.

"They traded for the first time in a while," he said, quoting the issue at 68½ bid, 69 offered, down from 75.25 bid, 75.75 offered last.

Also lower, though slightly so, were Charles River Laboratories International Inc.'s 2.25% convertibles due 2013. The trader placed the issue at 98.25 versus stock price of $29.60.

Mentioned in this article:

AAR Corp. NYSE: AIR

AMR Corp. NYSE: AMR

NuVasive Inc. Nasdaq: NUVA

United Continental Holdings Inc. NYSE: UAL

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