Primary pauses following market jolt; Illumina trades mixed after earnings; Red Hat gains

By Rebecca Melvin

New York, Oct. 21 – Trading action in the U.S. convertibles secondary market picked up on Tuesday, but the primary market was silent, as equities continued to surge following last week’s blast of volatility that jolted markets.

A pause on behalf of issuers to launch convertibles deals in this market was to be expected, a New York-based syndicate source said. But he thought issuance would resume in another week or so.

At that point, a decent rate of issuance should continue for the rest of the year, albeit not at the supercharged clip of last year’s fourth quarter.

For the year to date, 2014 new issuance has handily surpassed 2013’s year-to-date tally. But for the fourth quarter so far, the 2014 tally is well behind last year’s.

Meanwhile, Illumina Inc.’s convertibles were active and traded mixed after the San Diego-based developer of genetic research tools reported quarterly earnings that beat estimates.

Illumina’s longer-dated, 0.5% convertibles due 2012 were better on hedge. The shorter-dated tranche of 0% five-year bonds were better by a lesser amount, and the older 0.25% convertibles were down.

Red Hat Inc.’s 0.25% convertibles due 2019 traded up on both an outright and a dollar-neutral, or hedged, basis amid no particular news. Red Hat shares edged up 1.4%.

Ford Motor Co.’s 4.25% convertibles due 2016 traded actively and slightly higher after the Dearborn, Mich.-based automaker announced a call of those bonds on Tuesday.

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