Countrywide continues recovery; Amgen, BioMarin nudge up; Ford edges down; market mayhem 'dying down'

By Evan Weinberger

New York, Aug. 22 - On a trading day lacking an overall theme or impetus, Countrywide Financial Corp. convertibles continued their comeback from the lows of last week and several other convertibles changed hands.

Two of the notable issues traded came from the biotech sector, where investors buying in provided a small boost to Amgen Inc. and BioMarin Pharmaceutical Inc. convertibles.

While trading volume moved closer to the average range, there was no major thrust to trading. Investors appeared to be refining their positions as the equity markets appeared to regain their footing Wednesday.

All three major stock indexes were up more than 1% on Wednesday, with increased chatter about corporate takeovers, word that four banks taking advantage of the Federal Reserve's recently lowered discount rate and a drop in Treasury notes appearing to turn around sentiment.

The Dow Jones industrial average picked up 145.27 points, or 1.11%, Wednesday, closing at 13,236.13. The Nasdaq was the big gainer on the day, adding 31.50 points, or 1.25%, for a closing level of 2,552.80. And the Standard & Poor's 500 closed at 1,464.07, a gain of 16.95 points, or 1.17%.

"I think a lot of the mayhem is dying down, so I think that's probably a good thing," a sellside analyst said.

But there was more troubling news in the mortgage sector Wednesday, as Lehman Brothers shuttered its subprime lending unit and cut 1,200 jobs. Accredited Home Lenders Holding Co. and HSBC Holdings plc announced similar moves. Overall, 38,000 jobs have been lost in the mortgage sector in recent weeks. And the Federal Deposit Insurance Corp. announced the biggest increase in late mortgage payments since 1990.

All of that news curbed one longtime convertibles analyst's enthusiasm as he watched the markets rise Wednesday.

"I just don't think the world has changed so much in the last few days," he said. "I think it's very premature."

With no new issues coming to market Wednesday, other issues that traded came from JDS Uniphase Corp., which announced earnings after market close, Ford Motor Co. and Peabody Energy Corp.

Countrywide continues rise

A day after rumors of Warren Buffett taking a position in Countrywide sparked a big rise in the Calabasas, Calif.-based mortgage lender, the company's convertibles continued their recovery from the depths of last week, when rumors of bankruptcy filled the air.

While there was no further word on a Buffett bid for Countrywide, or how big such a bid might be, the stock continued to rise as well. Many analysts expressed skepticism on the Monday Wall Street Journal online report that sparked the speculation.

Countrywide's Libor minus 350 basis point series A convertible senior debentures due April 15, 2037 closed Wednesday at 89 versus a closing stock price of $21.82. They finished trading Tuesday at 87 versus a stock price of $21.79.

The company's Libor minus 225 bps series B convertible senior debentures due April 15, 2037 closed Wednesday at 86 versus a $21.82 stock price. They closed Tuesday at 84.5 versus a stock price of $21.79.

Stock in Countrywide (NYSE: CFC) closed Wednesday 3 cents, or 0.14%, higher.

Biotechs on the move, slowly

Amgen saw two of its convertibles edge up a bit in trading Wednesday. The Thousand Oaks, Calif.-based biotech firm saw its 0.125% convertible senior notes due Feb. 1, 2011 finish trading at 88.75 versus a closing stock price of $49.30. They closed Tuesday at 88.5 versus a $49.24 share price.

The company's 0.375% convertible senior notes due Feb. 1, 2013 closed trading Wednesday at 85.5 versus a closing stock price of $49.30 after finishing Tuesday at 85 versus a stock price of $49.24.

Amgen stock (Nasdaq: AMGN) closed up 6 cents, or 0.12%, on Wednesday.

BioMarin Pharmaceutical, a Novato, Calif.-based biotech firm, had its 1.875% convertible senior subordinated notes due April 23, 2017 close at 118.125 versus a $21 stock price on Wednesday after finishing Tuesday at 117.125 versus a $20.83 share price.

The company's stock (Nasdaq: BMRN) closed up 17 cents, or 0.82%, on Wednesday after announcing that it had signed an agreement with a lab at the University of California at San Francisco to develop new cystic fibrosis drugs.

Other trading action

Convertibles issued by JDS Uniphase, a Milpitas, Calif.-based producer of communications test and measurement solutions and optical products, saw its 1% convertible senior notes due May 15, 2026 rise to 80 versus a closing stock price of $14.36 Wednesday. The convertibles finished trading Tuesday at 78.875 versus a $13.75 share price.

JDS Uniphase stock (Nasdaq: JDSU) closed 61 cents, or 4.44%, higher Wednesday. The company announced after market close that its 2007 fiscal fourth-quarter loss was smaller than last year's on improved sales.

Ford's 4.25% convertible senior notes due Dec. 15, 2036 slipped a bit on Wednesday, closing at 108.25 versus a closing stock price of $7.85. They had finished the day Tuesday at 108.5 versus a $7.92 stock price.

Stock in the Dearborn, Mich.-based auto giant (NYSE: F) slipped as well, dropping 7 cents, or 0.88%, on Wednesday.

Peabody Energy's 4.75% convertible junior subordinated debentures due Dec. 15, 2066 moved up Wednesday, closing at 96.5 versus a closing stock price of $41.76. They finished trading Tuesday at 94.875 versus a stock price of $40.30.

Stock in the St. Louis-based coal miner (NYSE: BTU) rose $1.46, or 3.62%, on Wednesday.

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