Convertibles action picks up; tone improves; Exelixis bonds expand initially, then fade

By Rebecca Melvin

New York, Jan. 5 – Convertibles trading activity picked up on Tuesday compared to Monday when financial markets kicked off the new year with a stumble; but there were no major themes and or focus in the space, a New York-based trader said.

“It is pretty random,” the trader said when asked if trends were materializing in the convertible market as 2016 gets underway.

A second trader said that market tone was definitely better compared to Monday, with many names improving despite a few laggards.

Chesapeake Energy Corp. was notably better. The Chesapeake 2.5% convertibles traded up to 54.25 on Tuesday, which was up from about 42 a couple of weeks ago. A trader said that the rise in Chesapeake was particularly impressive given that oil prices were down on Tuesday.

Oil prices fell after a volatile Monday. West Texas Intermediate crude oil for February delivery lost 91 cents, or 2.5%, to $35.85 per barrel.

Concerns about economic growth in China have stoked fears about the global oil glut, and even headlines regarding tensions in the Middle East didn’t have the muscle to dampen the fears related to softer oil-market demand in the face of oversupply.

Elsewhere, Exelixis Inc. moved up on both an outright and dollar-neutral, or swap, basis in the early going, but as the underlying shares came off following a pop on trial data that was essentially already known, the bonds came off too, a trader said.

© 2015 Prospect News.
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