Newmont continues climb; Intel moves a bit lower; Ford trust preferreds drop

By Evan Weinberger

New York, July 20 - Convertibles investors were looking to deal as traders and analysts reported a relatively active trading day. Of course, the relative part comes with the caveat that it was a summer Friday, so the list of issues on the move was relatively short.

"It was not completely dead, but it was pretty quiet," one sellside analyst said.

With equity markets taking a steep tumble on bad earnings news, convertibles investors continued to try to get in on both tranches of Newmont Mining Corp.'s $1.15 billion offering that priced July 11. The 1.25% convertibles due 2014 closed at around 109.125 versus a stock price of $43. The 1.625% bonds due 2017 were trading at around 109.125 versus $43.

The 2014 bonds were trading at around 107.5 versus a closing stock price of $43.32 Thursday. The 2017 bonds were trading at 104.75 versus a closing stock price of $41.11 Monday.

"These Newmonts continue to get better," said one sellside analyst. "[With] the unease in the high yield market, people are going to the perceived safe haven of gold."

Shares in the Denver-based gold miner couldn't escape the broader fall. The stock (NYSE: NEM) closed 32 cents, or 0.74%, lower Friday.

Also active Friday were Ford Motor Co.'s trust preferreds. The trust preferreds, which come with a 6.5% coupon and are due 2037 (NYSE: F-PS), closed the day down $0.69, or 1.8%, at $37.74 Friday. It was unclear whether the beginning of negotiations on a new contract between Ford, General Motors Corp. and Daimlerchrysler AG and the United Auto Workers, Ford's outstanding tender offer on the trust preferreds with a deadline this month or the general stock downturn was the cause.

Common stock in the Dearborn, Mich.-based automaker (NYSE: F) closed down 23 cents, or 2.67%, at $8.40.

Following Intel Corp.'s mixed earnings report earlier in the week, investors continued to look at the company's 2.95% convertible due 2035. One sellside analyst quoted the bonds at 98.75 versus a closing stock price of $24.55. The bonds closed Thursday at 99.3125 versus $25.26.

The Santa Clara, Calif.-based semiconductor maker saw its stock (Nasdaq: INTC) lose 71 cents, or 2.81%.

Overall, Wall Street dropped precipitously Friday, bolstering talk of the markets' nervousness. The Dow Jones Industrial Average skidded 149.33, or 1.07%, closing at 13,851.08. The Nasdaq joined the freefall, losing 32.44 points, or 1.19%, to close at 2,687.60.

Foreign issues punctuate a summer Friday

Two new issues did come across the wire Friday, one from a surprising source.

A few weeks before France hits its summer shutdown, Paris-based Auréa, a motor oil and plastics recycling firm, priced €40 million in convertible bonds with a 3% coupon, a 6.5% yield and a 30% initial conversion premium due July 30, 2012.

The company plans to use the proceeds for corporate strategic acquisitions.

Coming in from Mumbai was $20 million in 0.5% foreign currency convertible bonds due 2012 from Micro Technologies India Ltd. The bonds are due to yield 7.75% with an initial conversion premium of 35%.

Micro Technologies is an information technology company specializing in security and life support systems.

Early SunPower model seen cheap

Although the convertible debentures SunPower plans to issue aren't scheduled to price until July 25, one sellside trader has already modeled it. The debentures offer will total $175 million, with a $25 million greenshoe, and are talked at a 0.5% to 1% coupon with an initial conversion premium of 22.5% to 27.5%. They will mature in 2027.

Using a credit spread of negative 127 basis points and a volatility of 50%, the trader has the debentures modeled at 99.69, a cheapness of 0.31%

The debentures will come to market at the same time as an offering of 2.54 million shares of class A common stock and the establishment of a new credit facility by SunPower.

SunPower is a San Jose, Calif.-based maker of solar cells, solar panels and solar energy systems. The company plans to use the proceeds for general corporate purposes, including expansion of existing production facilities, prepayments on raw materials and investment in complementary businesses, technologies or joint ventures.

SunPower stock (Nasdaq: SPWR) finished Friday 77 cents, or 1.12% lower, closing at $67.94.

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