Morning Commentary: Convertible energy names coming in; holiday quiets market

By Rebecca Melvin

New York, Oct. 13 – Convertibles were trading quietly early Monday with energy names contracting anywhere from 0.5 point to points as equities also sold off, convertibles traders said.

“I wouldn’t say it was active,” a New York-based trader said regarding the convertibles market. “But energy names are coming in.”

A second trader said that it was too early to tell how the convertibles market was doing as equities continued to sell off following a steep slide on Friday that left the Dow Jones industrial average in negative territory for the year so far.

Market action overall was lighter given the Columbus Day holiday, and the Securities Industry and Financial Markets Association recommended bond markets stay closed.

Cobalt International Energy Inc.’s 3.125% convertibles due 2024 continued to trade lower on Monday with the last print at 73.73, according to Trace data, down from about 75 on Friday.

Cobalt’s sister convertible, the 2.625% convertibles due 2019, weren’t yet seen in trade, and stood at 72, which was the last level on Friday, when that bond fell 3.56 points.

Cobalt shares were also lower again, seen down 27 cents, or 2.5%, at $10.54 last.

Stone Energy Corp.’s 1.75% convertibles due 2017 were also not yet seen in trade after falling 4.6 points on Friday to 94.38, according to Trace data.

A trader said that he hadn’t yet seen Energy XXI (Bermuda) Ltd. in trade. That company’s convertible tumbled hard in the last three sessions.

The trader also said that he hadn’t yet seen the convertibles of Tesla Motors Inc. or Twitter Inc. trading, although shares of those names were lower.

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