Countrywide a little stronger; GM up; Transocean down; newly priced Boston Properties, Ferro add

By Rebecca Melvin

New York, Aug. 14 - Financial convertibles were better Thursday after previous weakness, helping boost Countrywide Financial Corp., which sagged the previous session amid a generally weak financial tape and renewed worries about whether the paper is money good, market sources said.

The market Thursday, better for financials, was mostly quiet, however; and not even two new issues released for secondary trading - Boston Properties Inc. and Ferro Corp., both of which gained - and two released for trading on Wednesday, could encourage much enthusiasm.

"You turn on Bloomberg and see a lot of red dots," a New York-based sellside trader said regarding how quiet the session was. Red dots by contact names indicate that the person is not in the office.

Nasdaq Stock Market Inc. and Legg Mason Inc. were mentioned in trade and were higher, as was General Motors Corp., which saw its convertibles move up, albeit not as strongly as their underlying shares.

Transocean Inc. slipped another point as oil prices slipped 0.5% to $115.47 a barrel for September delivery of crude oil on the New York Mercantile Exchange. Transocean was one of the bigger volume names of the day, and Bunge Inc. dipped as well after Lehman Brothers initiated coverage on the stock of the White Plains, N.Y.-based agricultural business at "underweight.'

Among new issues: Boston Properties' 3.625% convertibles were mostly wrapped around par, after pricing at 99, versus shares that closed at $99.13; Ferro's 6.5% convertibles jumped to 103 versus a share price of $21.00; and RadioShack's 2.5% convertibles, which priced late Tuesday, traded at 101.75 versus a share price of $17.90 on Thursday.

Countrywide bounces back a little

Countrywide series A convertibles due April 2037, which pay a coupon of Libor minus 350 basis points, were seen at 98.875 late Thursday, which was 0.625 point better on the day and much better than Wednesday, when the paper dropped 0.75 point.

Given that the series A convertibles have a put in October, that was a big move, a Connecticut-based sellside trader said.

The trader said the down move Wednesday was driven mostly by general weakness in the financial sector. But other market players weren't that positive on the name.

"I'm telling people to sell," a Boston-based sellside trader said. "Bank of America has already said it wouldn't guarantee."

Another trader said the paper has gotten weaker in the last few days, and Bank of America has already said it wouldn't guarantee the bonds.

Countrywide, and its convertible bonds, which also include the series B convertibles due May 2037, which pay a coupon of Libor minus 225 bps, became part of Bank of America on July 1.

"Bank of America is facing so much stuff. They are going to leave it in the sub," the Boston-based trader said of the convertible debt.

Boston Properties prices at 99

Boston Properties' new 3.625% exchangeables, which were actually priced by subsidiary Boston Properties LP and significantly upsized, were seen at 99.75 bid, 100.25 offered versus a share price of $99 on Thursday.

A syndicate source said the exchangeables were never marketed at 100, in a move having to do with the fact that it's an offering by a real estate investment trust.

The Rule 144A deal was upsized to $650 million from $500 million. The 5.5-year exchangeable senior notes are due in February 2014, not the standard five-year maturity due to the fact that the company has maturities on other debt in 2013, the syndicate sources said.

It priced on the cheap end of talk, which was for a coupon of 3.125% to 3.625% and an initial exchange premium of 20% to 25%. Banc of America Securities, J.P. Morgan Securities and Morgan Stanley & Co. were bookrunners.

Shares of the Boston-based office properties REIT (NYSE: BXP) closed up $1.15, or 1.2%, at $99.13.

Ferro jumps on debut

The Ferro 6.5% convertibles traded at 103 versus a share price of $21.00, and the shares (NYSE: FOE) closed a little higher at $21.40, which was up $1.19, or 6%.

The $150 million registered deal priced at the cheap end of talk, which was 6% to 6.5% with a 60% to 65% initial conversion premium.

Citigroup Global Markets, Credit Suisse Securities and J.P. Morgan Securities were joint bookrunners of the registered shelf offering.

The bonds are non-callable for life, and there are no puts, except for a fundamental change-of-control put. They will have dividend protection in the form of a standard conversion ratio adjustment. There is also contingent conversion at a stock price trigger of 130% and a parity trigger of 97%.

In addition, if the company's stock exceeds the conversion price during an averaging period, holders will receive up to an additional 18.5552 shares, with the exact amount to be set by a formula.

Ferro is a Cleveland-based supplier of specialty materials and chemicals.

Nasdaq, Legg Mason better

The Nasdaq convertible senior notes and Legg Mason convertible preferreds are viewed by some as among the more favorable paper in the financial space right now as their businesses are somewhat insulated from credit and housing issues.

The Nasdaq 2.5% convertible senior notes due 2013 traded at 90 versus a share price of $32.125 on Thursday, which was little changed compared to late last week before the selloff of the last two days.

Shares of the New York-based stock market exchange (Nasdaq: NDAQ) closed the day higher at $34.04, up $1.92, or 6%.

Legg Mason's 7% mandatory convertible equity units due 2011 traded Thursday at $39.5 versus a share price of $40.625.

But the shares of the Baltimore-based asset manager (NYSE: LM) jumped to a higher close, up $2.09, or 5%, to $42.30.

When the equity units were priced in early May at a par of $50, the stock was $56.00.

GM gains, but shy of shares

Two of GM's three convertible bond issues traded in heavier-than-average volume, but their gains didn't keep pace with that of the common shares, as oil prices came off 0.5%. Crude oil for September delivery on the Nymex settled at $115.47 a barrel. Last week, crude fell to below $115 per barrel for the first time since May.

The Detroit-based automaker, which has seen its shares drop significantly over the last year as high gas prices and a weak economy have cut into its North American vehicle sales, has begun talking about potential sales of electric cars the development of which is on schedule to be ready to market in two years, company representatives say.

On Thursday, GM's 6.25% convertibles due 2033 (NYSE: GPM) closed up by 4% to 12.25 in heavy volume, versus a closing share price of $11.35, which was up 11% on the day.

The GM 5.25% convertibles due 2032 (NYSE: GBM), with its 10-year put, was up 1.7% at 12.30 also in heavy volume, while the GM 1.5% convertibles due June 2009 (NYSE: GXM) added 1% to 13.90 in lower-than-average volume.

Transocean slips a point

Transocean is see-sawing but to the downside. "There's a lot of vol in commodities right now, and nobody has a good feel where they will end up," a New York-based sellside desk analyst said.

All three of the Transocean convertible bonds were in the 104 range, which was down about a point from levels in the 105 range. On Wednesday, the Transocean 1.625% series A convertibles due 2037 were up 1.6 points.

Shares of the Houston-based oil services company (NYSE: RIG) ended the day down $2.23, or 1.7%, at $129.20 in lighter-than-average volume.

Bunge moves lower

The Bunge 4.875% convertible perpetual preferreds traded at 118 versus a stock price of $95.00 on Thursday after Lehman Brothers initiated coverage on the food and agricultural products company at "underweight."

The 4.875s were indicated at nearly 120 on Wednesday, so the drop seemed to match a 3.6% drop in its underlying shares (NYSE: BG), which closed down $3.53 at $94.17.

Bunge's 5.125% mandatory convertible preference shares were indicated to close at 892 compared to 914 on Wednesday.

Bunge made headlines in June when it announced it would buy Corn Products International in an all-stock deal worth about $4.8 billion and assume about $414 million in debt.

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