Morning Commentary: Holiday weighs on convertible bond volume; Vipshop firms post-earnings

By Stephanie N. Rotondo

Seattle, Feb. 21 – The shortened holiday week was starting out slowly for the convertible bond market, a trader reported early Tuesday.

“This is a week people take off,” he said.

Though liquidity was limited overall, Vipshop Holdings Ltd. was relatively active, trading up about 0.5 point outright on the back of earnings.

The Chinese online discount retailer reported its fourth-quarter results on Monday, showing a 36.5% gain in revenue and a 39% increase in active customers. Net income was meantime up nearly 52% year over year.

A conference call was scheduled for Tuesday morning.

A trader noted that at current levels in a 100.125 to 100.5 range, the 1.5% convertible notes due 2019 were trading with a 55% premium.

The underlying stock (NYSE: VIPS) was also better, rising 84 cents, or 6.91%, to $13.00 a share in mid-morning trading.

Meanwhile, FelCor Lodging Trust Inc.’s $1.95 series A cumulative redeemable convertible preferred stock (NYSE: FCHPrA) was gaining ground on news the real estate investment trust was being acquired by Ashford Hospitality Trust Inc.

The convertible preferreds were up 14 cents in early dealings at $24.80. As for the common shares (NYSE: FCH), they were up 56 cents, or 7.75%, at $7.79.

Ashford is paying $9.27 per share for FelCor stock, a 28.2% premium over Friday’s closing share price. All told, the deal is valued at $1.27 billion.

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