Midday Commentary: Tower Group bounces after inking reinsurer deals; U.S. primary remains quiet

By Rebecca Melvin

New York, Oct. 2 - Tower Group International Ltd.'s convertibles bounced in early trade Wednesday after the ailing Bermuda-based reinsurance company announced a series of reinsurance agreements aimed at relieving its financial constraints for the time being.

The convertibles and stock plunged Friday amid speculation that the company might be forced into a reorganization in the face of a reserve crisis.

The Tower bonds traded as high at 94 early Wednesday and were seen around 92 later, according to Trace data, after sliding to the low 80s on Monday.

Tower shares were up about 5%.

"They are bid up," a New York-based trader said of the convertibles, adding that the name has been very volatile.

Tower said it has entered into agreements with three reinsurers, including Arch Reinsurance Ltd., Hannover Re and Southport Re.

The U.S. primary convertible market remained quiet as equities moved lower for a second straight day amid a partial shutdown of the federal government.

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