Morning Commentary: Convertibles head to higher ground; Horizon paper weakens amid Depomed battle

By Stephanie N. Rotondo

Phoenix, Sept. 29 – The convertible bond market was trying to recoup some of the previous day’s losses in early Tuesday trading.

Still, a trader said “nothing is up big. Everything was quoted down a quarter to a half [point] yesterday, and it’s back up a quarter this morning.”

The trader added that while overall volume was “a little better,” there was “nothing chunky of any sort, just ones and twos.”

Horizon Pharma plc’s 2.5% convertible notes due 2022, however, were down nearly 2 points at mid-morning, trading with a 93 handle.

The stock (Nasdaq: HZNP) was down 93 cents, or 5.19%, at $17.07.

The weakness came as the Irish pharmaceutical company continued to trade barbs with Depomed Inc. Horizon has been looking to take the company over since May in an all-stock offer, but Depomed’s board of directors has thrice refused any takeover attempts.

On Monday, Depomed called out Horizon, stating that the company was making false claims to Depomed shareholders. For its part, Horizon has been pushing for Depomed to hold a special shareholder meeting to allow holders to vote on a potential offer instead of rejecting the bid outright. Horizon has used an advisory firm’s recommendation for such a meeting as the basis of its argument, though the recommendation does not encourage shareholders to vote one way or another.

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