Broadcom active among mandatories; Tesla down, MercadoLibre underperforms; Ovid on tap

By Rebecca Melvin

New York, Oct. 3 – Trading in mandatory convertible names on Thursday was concentrated in a handful of names such as recent new issues including Broadcom Inc.’s 8% mandatory convertible preferred shares and NextEra Energy Inc.’s 4.872% equity units, according to a New York-based market source.

The Broadcom mandatories were seen 1,022.5 bid, 1,032.5 offered versus the common stock’s closing price of $274.43, according to the source.

The common shares of the San Jose, Calif.-based chip maker ended up 1.6% after trading down early in the session.

A bond that was active in trade was iQIYI Inc.’s 2% convertibles due 2025, which traded up a point to 87.125.

Tesla Inc.’s 2% convertibles due 2024 dropped to under par with a 98 handle as shares of the electric car maker were under pressure amid questions about demand for its vehicles. The bonds were down more than three points from their previous prints, according to Trace data.

Otherwise, convertibles trading action was muted as U.S. shares whipsawed. Stocks rebounded after starting out with losses that extended the previous two session’s losses. The Dow Jones industrial average dropped as much as 335 points in the early going and the other indices were also lower after more economic data showed the economy was less robust than hoped.

Services put in a weaker showing in the Institute for Supply Management’s U.S. nonmanufacturing index. It dropped to 52.6 in September, which still represented an expansion but representing the lowest reading since August 2016. The figure was down from 56.4 in August.

The Dow turned around to finish up by more than 120 points.

After the market close, Ovid Therapeutics Inc. was shown in a regulatory filing to be offering series A convertible preferred stock and a concurrent offering of common stock. The preferred deal was said to be $30 million in size. But that information could not be confirmed with the underwriters Cowen and William Blair by Prospect News’ deadline.

Each share is convertible into 1,000 shares of common stock at any time at the holder’s option.

The proceeds of both the preferred and common stock offerings are earmarked primarily to advance the clinical development program of OV101 for Angelman syndrome and Fragile X syndrome and the clinical development program of OV935 for DEEs. The remaining proceeds will be for working capital and general corporate purposes.

Shares of Ovid Therapeutics, a New York-based biopharmaceutical company, plunged 47 cents, or 14%, in after-hours action. At the market close, the bonds were up 14 cents, or 4.5%, at $3.27.

Early in the session, MercadoLibre Inc. was pulled into trade as the broader markets continued to struggle with slowing economic growth and recession expectations.

The MercadoLibre 2% convertible notes due 2028 traded down to 144 in the early going on Thursday from around 146 on Wednesday. Shares of the Argentine e-commerce and online auctions site were down $2.54, or 0.5%, at $541.56. MercadoLibre shares are still higher for the year to date, but they have dropped over the past month.

Whether convertible players are lightening up on risk was not clear. Regarding MercadoLibre, one market source said that the activity is likely indicative of weakness in emerging markets and selling in higher beta high yield and emerging markets. The name “would underperform the generic convert market due to that,” the source said.

Also seen in trade on Thursday was Ligand Pharmaceuticals Inc.’s 0.75% convertible notes due 2023, which changed hands in the early going at steady pricing compared to Wednesday as shares of the San Diego-based biopharmaceutical company traded higher.

The Ligand convertibles traded at 83.795 and 84.16, according to Trace data, with the underlying stock seen around $99.00.

PDC Energy Inc.’s 1.125% convertibles due 2021 traded at 94.125, which was up from 92 and change. Shares of the Denver-based oil and gas exploration and production company extended losses and were last seen at $25.72.

Mentioned in this article:

Broadcom Inc. Nasdaq: AVGO

iQIYI Inc. Nasdaq: IQ

Ligand Pharmaceuticals Inc. Nasdaq: LGND

MercadoLibre Inc. Nasdaq: MELI

NextEra Energy Inc. NYSE: NEE

Ovid Therapeutics Inc. Nasdaq: OVID

PDC Energy Inc. Nasdaq: PDLI

Tesla Inc. Nasdaq: TSLA

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.