Morning Commentary: U.S. convertibles start off holiday-shortened week on a softer note

By Rebecca Melvin

New York, Nov. 23 – U.S. convertibles were seen weaker in quiet trade to start off the holiday-shortened week on Monday. Financial markets are closed Thursday for the Thanksgiving holiday.

“It’s weaker; it seems sort of like a hangover from the last couple of weeks, as the weakness in energy and other sectors like solar is spilling over to the broader market,” a New York-based trader said.

Chesapeake Energy Corp.’s convertibles complex has been a drag on the convertibles market as has SunEdison Inc. Both names are important in terms of the volume of issuance each has in the convertibles market.

Chesapeake convertibles were for sale again on Monday with the Chesapeake 2.5% convertibles due 2037 changing hands at 87.25, which was down 1.5 points, according to Trace data.

“That doesn’t help,” the trader said, and overall market players were looking to trim down and cut risk.

As for specific names, it was difficult to tell exactly where most things were, given light volumes, but “things are softer to say the least,” he said.

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