Booking 2021 notes active; Aerie Pharmaceuticals expands dollar neutral as shares surge

By Rebecca Melvin

New York, Oct. 11 – Booking Holdings Inc.’s longer-dated 0.9% bond due 2021 was the most actively traded issue in the convertibles market on Friday, with the bond’s sister issue, the 0.35% convertibles due 2020, not seeing much trading action at all, according to Trace data.

The Booking 0.9% notes were up 0.75 point at 116.417, with shares of the company, formerly the Priceline Group Inc., up $39.00, or 2%, at $2,002.02.

The Booking convertibles, which are favored by both hedged and outright investors, will sometimes trade because a market player is covering their short or as outright buyers step in when the bonds are being shorted.

“Booking is one of the richest, balanced bonds in the convertible universe. Outright investors like the story and the investment-grade rating,” a New York-based market source said.

Another actively traded issue was the IAC/InterActive Corp. 0.875% convertibles due 2022, which were seen at 160.6, against shares at $229.80, which were up $4.73, or 2%. The shares pared gains in the session to end higher by only 0.9% at $227.03.

Aerie Pharmaceuticals Inc.’s 1.5% convertibles due 2024 traded actively on Friday and were called better by a point on a dollar-neutral basis as shares spiked by as much as 22% intraday. The surge occurred after the Durham, N.C., developer of treatments for glaucoma and other eye diseases filed with the Securities and Exchange Commission an investor presentation that it is going to be making in coming days.

The presentation showed that the company experienced a surge in the number of bottles of Rhopressa and Ricklatan shipped to pharmacies in the week ending Oct. 4.

It also outlined Aerie’s key priorities as continued successful launch execution of Rhopressa and Rocklatan, and noted that Aerie is well-financed with $109 million in cash and investments as of June 30 and with $316 million in convertible debt raised in early September.

On the back of the positive presentation, the company received analyst upgrades from Needham and Stifel, which further bolstered the stock.

“The convertibles were seen to be up 1 point on a dollar-neutral basis on the back of good news and the stock ripping,” a New York-based market source said.

The convertibles market overall was trading higher on an outright basis with a bump up in U.S. equities. The moves were mostly fractional gains, although Etsy Inc.’s 0.125% convertibles due 2026 jumped 2 points to 102.8 in early action in tandem with a 3% move up in the paper’s underlying shares to $59.49.

The primary market remained quiet, however, with no new issues announced or priced this past week. The primary has quieted after a record monthly tally in September.

Stocks rallied amid optimism regarding international trade as high-level U.S. and China officials were negotiating a trade deal. U.S. president Donald Trump said early Friday that “good things are happening,” and in fact a partial trade deal was announced later in the session. The U.S. said it reached agreement on a “phase one deal.”

While the Dow Jones industrial average closed off its highs for the day, it still gained 320 points, or 1.2%, to 26,516.59; the Nasdaq Composite gained 106.26 points, or 1.3%, to 8,057.04, and the S&P 500 gained 32 points, or 1%, to 2,970.27.

Mentioned in this article:

Aerie Pharmaceuticals Inc. Nadsaq: AERI

Booking Holdings Inc. Nasdaq: BKNG

Etsy Inc. Nasdaq: ETSY

IAC/InterActive Corp. Nasdaq: IAC

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