Cemex convertibles gain ground with stock; Whiting Petroleum notes give up recent gains

By Stephanie N. Rotondo

Seattle, March 21 – Cemex SAB de CV’s 3.75% convertible notes due 2018 were “trading a lot” on Monday, according to a trader.

He said the notes have “moved up nicely with the stock,” placing the issue at 103. That was up from opening levels in a 101.75 to 102 context, he said.

As for the equity, that was up 23 cents, or 3.33%, to $7.14.

“So that’s a big move,” the trader said.

Last week, the Mexico-based cement and aggregate producer held an investor day in which management said the plan was to reduce debt by $2 billion by 2017. For the previous two years, the company had reduced its debt burden by just over $2 billion, including a recent refinancing of high-yield notes.

Cemex also said last week that it had extended its $3.8 billion credit facility through 2020, as well as lowered its interest rate.

“It was bullish,” a trader said of the news.

But away from Cemex and Whiting Petroleum Corp., liquidity was thin. A trader blamed the muted trading on the fact that it was a shortened holiday week.

“And it’s only going to go down,” he said of trading volume.

Whiting comes off highs

Whiting Petroleum’s convertible debt gave up some of the gains incurred on Friday when the company announced a privately negotiated debt swap.

One trader saw the 1.25% convertible notes due 2020 at 61.75 bid, 62.25 offered.

That compared to levels closer to 63 on Friday.

Another source placed the issue around 81.875, a loss of about a point.

On Friday, the Denver-based oil and gas company said it had privately exchanged about $430 million of unsecured notes for convertible debt. The swap included $48.7 million of 6.5% notes due 2018; $61.8 million of 5% notes due 2019; $152.5 million of 5.25% notes due 2021 and $166.7 million of 6.25% convertibles due 2023.

For their holdings, bondholders received convertible notes with the same coupon and maturity as the issues they held.

The new convertibles were already trading come Monday.

A source placed the 6.25% convertible notes due 2023 at 84.374, off 1.5 points. The 5.25% convertible notes of 2021 meantime rose over a point to 81.375.

The 5% convertible notes due 2019 closed at 84.75, a loss of nearly 2 points.

The stock underlying the convertibles ended the day off 28 cents, or 3.36%, at $8.06.

Mentioned in this article:

Cemex SAB de CV NYSE: CX

Whiting Petroleum Corp. NYSE: WLL

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