Convertibles firm, but market pauses after volatile week; DryShips up after equity raise

By Rebecca Melvin

New York, Oct. 24 – Convertibles remained firm but quieted on Friday from the hectic and volatile pace of the week overall, a New York-based trader said.

“There is good two-sided flow, with buyers outnumbering sellers. But I think people are taking a breath right here after one of the more active and volatile weeks that we’ve seen,” the trader said.

Volume among many smaller deals was inhibited by a lack of sellers and spreads remained wide for some issues, a second New York-based trader said.

DryShips Inc.’s 5% convertibles, which mature Dec. 1, were very active and gained another point to 99.5 bid, 99.75 offered after the Athens-based shipping company announced that it has raised $350 million in an equity offering of 250 million shares of common stock.

The equity raise boosted the DryShips convertibles, which sank to 90 last week as investors worried about whether the bonds would be repaid, but the company’s shares slid more than 20% on the news.

Ford Motor Co.’s convertibles, which have been called, were seeing “small trading,” but buyers were waiting in the wings if sellers emerged. The bonds traded down as the shares declined after weak earnings.

BioMarin Pharmaceutical Inc.’s convertibles popped on an outright basis, according to Trace data, after the California-based biopharmaceutical company reported earnings that beat estimates but missed on revenue. The company also raised full-year revenue below consensus. Shares jumped 8%.

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