Convertibles improve; Horizon Pharma paper weakens amid Depomed battle; Chesapeake lower

By Stephanie N. Rotondo

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

A 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, traded lower on the day.

One trader said the bonds were off 4.5 points outright toward the end of the day, trading at 90.6. The notes were down nearly 2 points at mid-morning, trading with a 93 handle.

The stock retreated $1.20, or 6.64%, to $16.81.

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.

Chesapeake Energy Corp. announced a round of layoffs on Tuesday as the Oklahoma City-based oil and gas producer struggles amid a low oil price environment.

On Tuesday, the 2.5% convertible notes due 2037 were down “1.5 points further,” trading at 86.

A trader said SunEdison Inc. was on the busier side in Tuesday trading, with “six different issues” hitting the tape.

The most active of the convertible notes was the 2.625% paper due 2023 – an issue priced in May and slated to pay its first coupon payment in December. The trader said the bonds were trading at 57.5.

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