Morning Commentary: Anacor rises amid speculation it’s a target; health care better to buy

By Rebecca Melvin

New York, April 6 – Anacor Pharmaceuticals Inc.’s 2% convertibles were higher again at about 120 early Wednesday with the underlying shares of the Palo Alto, Calif.-based biopharmaceutical company up at $70.40, a convertibles sellsider said.

The Anacor convertibles debuted in the market on Friday and were at 112 versus a share price of about $63.00 on Tuesday.

“It’s been a nice move,” the sellsider said of the gains in Anacor.

The convertible is going up on an outright basis because the stock is moving up, but it is likely that there has also been expansion on a dollar-neutral, or swap, basis, he said.

The push higher is on the back of expectations that Anacor may be a likely target of Allergan plc, which had its planned tie up with Pfizer Inc. nixed after a U.S. tax rule change.

The U.S. Treasury Department issued new rules reducing the advantages of tax inversion.

Health care convertibles were generally better on Wednesday. “There are better buyers across the board with people thinking there is a bounce here,” the sellsider said.

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