PDL BioPharma drops after auditor news; Gilead remains weaker; secondary softness persists

By Rebecca Melvin

New York, Sept. 18 – PDL BioPharma Inc.’s 4% convertible due 2018 was a top trader in the convertibles market Thursday, and those notes dropped sharply on an outright basis along with the underlying shares after the Incline Village, Nev.-based biopharmaceutical company announced that its independent auditors Ernst & Young LLP resigned effective Sept. 11.

PDL BioPharma has two other convertible bond issues that weren’t actively traded. The focus in that name was the 4% convertibles, a trader said.

Gilead Sciences Inc.’s 1.625% convertibles, which have been trading below parity for some time, remained weak but stable at about 1.625 points below parity, market players said.

Biotechs have been in the same boat as the broader convertible market, trending weaker as the new issue calendar has gotten heavier, the trader said.

“A lot of things have been weak, Twitter came through, and people are finally getting over that. Alcoa came through. There’s been good issuance in good size, and when people need to lighten up, they do,” the trader said.

Twitter Inc. priced $1.8 billion in two convertible tranches last week, and the securities lagged in the secondary market.

But there were signs of recovery in the last day and a half with equities lifting, a trader said.

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