Midday Commentary: Cobalt International takes another leg down; Ford weak again

By Rebecca Melvin

New York, Dec. 19 - Cobalt International Energy Inc.' convertibles took another leg down in active trade early Thursday after the Houston-based oil and gas exploration company reported before the market open that its Gulf of Mexico Aegean #1 exploratory well didn't encounter commercial hydrocarbons after reaching its objective total depth.

Cobalt's s 2.625% convertibles due 2019 fell outright by3.7 points to 82.8, according to Trace data.

It was also down on a dollar-neutral, or hedged, basis by 1.5 points to 1.75 points, compared to Wednesday, a New York-based trader said.

"It's getting killed," the trader said when asked how the issue was doing on a hedged basis.

Cobalt shares fell $1.39, or 8.9%, to $14.27.

The Cobalt bond has been hemorrhaging for several weeks. On Dec. 2, they tumbled by more than 6 points to 93.125 bid, 93.625 offered and contracted 0.25 point to 0.375 point on a dollar-neutral basis when the delta was around 50% from 60% and the shares dropped 16.6%. The stock moves followed disappointing news about more natural gas being found than expected in the company's Lontra well off of Angola.

Elsewhere, convertibles were pretty quiet early Thursday as market players began to anticipate the upcoming Christmas and New Year's holidays beginning next week.

Ford Motor Co. was weak again in a continuation of trade Wednesday when the Dearborn, Mich.-based auto maker released disappointing 2014 profit guidance, and Archer-Daniels-Midland Co.'s 0.875% convertibles due in February were down 0.6 point at 104.854, according to Trace data.

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