Boston Properties, Best Buy, PDL BioPharma, Intel slip; JetBlue, Countrywide stand still; signs of life appear

By Evan Weinberger

New York, Sept. 5 - Boston Properties LP, Best Buy Co. Inc., PDL BioPharma Inc. and Intel Corp. convertibles all moved lower Wednesday. JetBlue Airways Corp. convertibles went on a roundtrip on the day and Countrywide Financial Corp.'s convertibles managed to regain the position they had last week.

Traders and analysts saw signs of life in what had been a somewhat dead market, but with no new issues driving movement and wild swings in the stock markets making for uncomfortable investors, activity was still sluggish.

"It's kind of quiet. It was a little better to buy" this afternoon, according to one senior fund manager.

A sellside analyst said Wednesday had been an average trading day, but there was not much excitement to the market. "I guess today was OK, not that active," he said.

A National Association of Realtors report showed that pending sales of existing homes in July were down just over 16% from the same time last year and down over 12% from June. That drove down stocks sharply early. The release of the Federal Reserve's Beige Book, which gives regional economic readings from around the country, was released at 2 p.m. ET. On the plus side, the report showed that most of the effects of the subprime mortgage crisis and the ensuing credit crunch were limited to the real estate sector for now. For investors looking for an interest rate cut, that was also potentially bad news as it threw their certainty into doubt.

The Dow Jones Industrial Average, which had been down around 200 points in early afternoon trading, wound up giving back all of Tuesday's gains and then some, losing 143.39 points, or 1.07%, for a close of 13,305.47.

The Nasdaq closed at 2,605.95, a drop of 24.29 points, or 0.92%. The Standard & Poor's 500 tumbled 17.13 points, or 1.15%, for a close of 1,472.29.

The continuing instability is making some investors turn conservative, and new issuers are going to have to sweeten the pot as credit concerns continue. But analysts and fund managers are confident the new issue market will pick up, eventually.

"If we're talking about general tendencies, accounts are tending to be more cautious than they used to be," one sellside analyst said. "Converts are going to have to come at very different terms when we get new issues. But they will come. It's still going to be a more attractive alternative to many companies to straight debt."

The fund manager added: "If you want to issue bonds and you're in the lower credit spectrum, the window is pretty hard. It's kind of tough to raise money now."

Time to swap financials for tech?

While tech-issued convertibles have been the recent darlings of investors, financials have fallen by the wayside. Market players stayed away from anything that had a whiff of mortgage debt lingering in the vicinity the past few weeks. That's understandable.

But is it time to start looking at financials again? Maybe, but very carefully.

"I think there's probably an opportunity in some of them. You've just got to be slow and methodical with them," a fund manager said. "With 20% of the index in financials, you don't want to be underweight in them forever."

That said, very few financial or tech issues had a positive day Wednesday.

Boston Properties' 3.75% exchangeable senior notes due May 15, 2036 slipped to 109.5 versus a closing stock price of $98.47. They finished trading Tuesday at 110.375 versus a stock price of $101.09.

Stock in the Boston-based real estate investment trust focusing on office properties took a significant hit Wednesday. Boston Properties stock (NYSE:BXP) fell $2.62, or 2.59%, Wednesday.

Also in the realm of the financials, Calabasas, Calif.-based Countrywide saw its Libor minus 350 basis points series A convertible senior debentures due April 15, 2037 close at 91 versus a closing stock price of $18.81. When they were last seen Aug. 29, they were at 91 versus a stock price of $19.81.

Countrywide's Libor minus 225 bps series B convertible senior debentures due April 15, 2037 closed at 88.5 versus a stock price of $18.81. They were last seen Aug. 29 at 88.5 versus a closing stock price of $19.81.

Stock in Countrywide (NYSE: CFC), America's largest mortgage lender, plummeted $1, or 5.05%, on Wednesday after the tumble in pending home sales was announced.

On the technology side, Intel's 2.95% junior subordinated convertible notes due Dec. 15, 2035 slipped to 104.125 versus a closing stock price of $25.99 Wednesday. They finished trading Tuesday at 104.25 versus a stock price of $26.18.

Stock in Intel (Nasdaq: INTC), a Santa Clara, Calif.-based semiconductor producer, slipped 19 cents, or 0.73%.

And in biotech, Sacramento, Calif.-based PDL BioPharma saw its 0.75% subordinated convertible notes due Aug. 16, 2023 close at 110.25 versus a closing stock price of $20.11, a dip from Tuesday's close. They finished trading Tuesday at 110.5 versus a $20.18 share price.

PDL BioPharma stock (Nasdaq: PDLI) dipped 7 cents, or 0.35%, Wednesday.

JetBlue stays at gate, Best Buy slips

JetBlue Airways' 3.75% convertible debentures due March 15, 2035 traded Wednesday, but their close looks very similar to Tuesday's. In fact, it's pretty much exactly the same. The convertibles closed at 90.875 versus a closing stock price of $9.59. They closed Tuesday at 90.875 versus a stock price of $9.67.

New York-based JetBlue's stock (Nasdaq: JBLU) gave back 8 cents, or 0.83%, Wednesday.

Best Buy convertibles took a slide Wednesday. The Minneapolis-based electronics retailer saw its 2.25% convertible senior notes due Jan. 15, 2022 close at 105.375 versus a closing stock price of $43.26. The convertibles had closed Tuesday at 106.5 versus a $43.94 share price.

Best Buy stock (NYSE: BBY) fell 68 cents, or 1.55%, Wednesday.

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