Convertibles quiet heading into holiday weekend: Priceline 0.9% notes trade slightly lower

By Rebecca Melvin

New York, Aug. 29 – Priceline Group Inc.’s convertibles were seen in trade on Friday with sellers in the older 1% convertibles and buyers in the 0.9% convertibles, a New York-based trader said.

But the Priceline 0.9% convertibles were seen just slightly lower at about 98.

The Priceline bonds have traded actively almost every day since the Norwalk, Conn.-based online travel company priced the $1 billion of 0.9% convertibles earlier this month. The new deal joined two existing issues.

Quiet was the theme for the rest of the market. Frontline Ltd.’s 4.5% convertibles weren’t seen to have traded despite a 9% drop in underlying shares after the tanker company said a full restructuring of the company is being considered as cash from operations remains insufficient to repay the $190 million convertible at maturity next April.

Those bonds were last at 91.125, but the level was from earlier in the week.

Chiquita Brands International Inc.’s convertibles were not seen to have traded either on Friday after a 100.25 round lot printed on Thursday. Meanwhile Chiquita shares pared early losses to end unchanged.

But the battle for who acquires Chiquita continued this week. Chiquita continues to ask shareholders to vote for the combination with Fyffes plc, which was announced in March and is expected to be completed in December.

On Thursday, shareholders were urged to vote against the Fyffes transaction and for the Cutrale-Safra proposal in a press release marking the commencement of the Cutrale-Safra proxy statement mailing in advance of a special shareholder meeting set Sept. 17.

Convertibles players appear to be aligned with the company on this one.

“The Fyffes transaction won’t trigger a change of control clause to my knowledge. Now the Latin American guys stepping in and paying cash for the company would. To my way of thinking nobody wants the latter,” a New York-based trader said.

In equities, the Standard & Poor’s 500 stock index closed at another record high – albeit on thin volume – to mark the end of August, after slumping to near a three-month low on Aug. 7.

The S&P gained 6.63 points, or 0.3%, to 2,003.37, the Dow Jones industrial average rose 18.88 points, or 0.1%, to 17,098.45 and the Nasdaq Composite added 22.58 points, or 0.5%, to 4,580.27.

In economic data, personal income growth slowed in July after two strong months, rising just 0.2% after gains of 0.5% in June and May. Analysts had expected a 0.3% boost for July, the Commerce department reported.

Personal spending unexpectedly declined 0.1% after a 0.4% jump in June. Market expectations were for a 0.2% gain.

Priceline ‘a touch lower’

Priceline’s new 0.9% convertibles due 2021 were seen at 98 bid, 98.125 offered on Friday, which was “just a touch weaker,” a New York-based trader said.

Nevertheless there were better buyers for the 0.9% paper and better sellers in the older Priceline 1% convertibles.

The 1% convertibles were seen in trade at 142 and 143.

There was also some activity in the Priceline 0.35% convertibles, which ended the session at 117.625, according to Trace data.

The two older issues are more equity sensitive than the newer issue.

Priceline shares lost $6.40, or 0.5%, to $1,244.31 in lighter-than-average volume.

Mentioned in this article:

Chiquita Brands International Inc. NYSE: CQB

Frontline Ltd. NYSE: FRO

Priceline Group Inc. Nasdaq: PCLNI

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