Morning Commentary: Convertibles trading wanes due to holiday; higher-grade issues take focus

By Stephanie N. Rotondo

Phoenix, Sept. 23 – A convertible bond trader said the Yom Kippur holiday was weighing on market activity early Wednesday.

“There’s nothing doing,” he said.

A bulk of the action as of mid-morning was centered on “higher-grade stuff,” such as LAM Research Corp., Illumina Inc. and Tesla Motors Inc., the trader said. But even there, he said the moves such paper was making was “trendless,” given the low volume.

LAM’s 1.25% convertible notes due 2018 were straddling at 125, unchanged on the day. Illumina’s 0.5% convertible notes due 2021 were meantime better at around 121, versus previous levels around 119. And Tesla’s 1.25% convertible notes due 2021 were seen trading with a 96 handle, which was also about unchanged.

In terms of the stocks underlying those convertible securities, they were trading mixed, lending credence to the “trendless” characterization.

The trader also noted that even oil and gas paper – which had been mostly weaker Tuesday amid a broader sell-off in the markets, including commodities – was mixed at mid-morning.

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