Convertibles activity wanes; Herbalife gains on news; Vipshop dips; Illumina tracks stock

By Stephanie N. Rotondo

Seattle, Aug. 21 – After about two weeks of an active primary calendar, the convertible bond market was taking a breather on Monday.

“It’s the penultimate week of summer,” a trader said. “There is nothing going on at all.”

Herbalife Ltd. was in the news on Monday, as the company said it had ended talks to go private.

The company said in lieu of going private, it was instead planning a modified Dutch tender offer to buy back up to $600 million in stock.

Meanwhile, a trader said Vipshop Holdings Ltd.’s 1.5% convertible notes due 2019 were down “a whole half point” in Monday dealings.

His somewhat sarcastic review came as the company’s stock fell further into the single-digits.

Illumina Inc.’s 0% convertible notes due 2019 were also making small moves, tracking the company’s stock higher.

A trader deemed the notes up 0.25 point at 104.625.

Another source saw the issue trading in a 104.25 to 104.75 range.

As for the underlying equity, it was up $1.36 at $190.68.

There was no fresh news out on the San Diego-based DNA sequencing company.

As for recently priced issues, Jazz Pharmaceuticals plc’s $500 million of 1.5% convertible notes due 2024 were pegged at 97 bid, 97.25 offered.

A trader said that was a shade higher from Friday’s levels.

At another desk, the convertibles were seen trading mostly between 97 and 97.25, which was called unchanged to 0.25 point higher.

However, the source noted that there were some trades just south of 97.

Jazz’s shares declined $1.78, or 1.23%, to $142.62.

The Rule 144A deal priced on Friday with an initial conversion premium of 50%. The issue also came discounted at 97.

Morgan Stanley & Co. LLC was the active bookrunner.

Herbalife bounces up

Herbalife’s 2% convertible notes due 2019 firmed up on Monday, following the stock higher.

At the end of the day, a source placed the convertibles in a 100.75 to 101.125 context, which was up from previous trades with a 98 handle.

The stock meantime rose $6.09, or 9.83%, to $68.04.

Trading in the bonds didn’t come until after mid-morning, however.

At mid-morning, a trader said that the equity was “up almost 10%, but no bonds have printed.”

Herbalife said on Monday that it had been in talks to take the company private. While those talks failed to bring about such a deal, the company is planning a modified Dutch tender offer to buy back up to $600 million in stock between $60.00 and $68.00 a share.

Vipshop dips

Vipshop Holdings’ 1.5% convertible notes were following the equity lower on Monday, continuing the trend set last week after the company reported disappointing earnings.

A source said the paper traded mostly in a 98.75 to 99 context, though there was a print below 98.5 late in the day.

Another market source saw the issue in a 98.75 to 99 context, which was deemed about unchanged.

Vipshop’s stock declined 59 cents, or 5.98%, to $9.27.

The equity began to trade off last week when the Chinese online retailer reported earnings that once again showed a decline in growth. After the results were released on Thursday, the stock dropped about 13% between then and Friday.

Mentioned in this article:

Herbalife Ltd. NYSE: HLF

Illumina Inc. Nasdaq: ILMN

Jazz Pharmaceuticals plc Nasdaq: JAZZ

Vipshop Holdings Ltd. Nasdaq: VIPS

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