Morning Commentary: Energy convertibles melting down; Intel lower outright after earnings beat

By Rebecca Melvin

New York, Jan. 15 – Energy convertibles were getting clobbered again on Friday, and the rest of the market was seeing pockets of weakness as well as areas where things were holding in as U.S. and global equities plunged again, market players said.

Energy paper couldn’t hold in because “you can’t value their assets just now,” a New York-based trader said as to why some of those convertibles were melting down.

Cobalt International Energy Inc.’s paper was an example of something not holding, but Restoration Hardware Holdings Inc.’s 0% convertibles due 2019 were trading down in an orderly fashion, traders said.

Cobalt’s 2.625% convertibles due 2019 were around 51 and the Cobalt 3.125% convertibles due 2024 were around 41 early Friday, according to Trace data, with shares at about $3.50.

Meanwhile, Intel Corp.’s bonds fell in tandem with the underlying shares despite the fact that the Santa Clara, Calif.-based chip giant handily beat earnings estimates.

Intel’s 2.95% convertibles due 2035 traded down about 4 points to about 120.

Intel’s 3.25% convertibles due 2039 dropped to about 148 from 160.

Shares were down 9%, or $2.93, at $29.82.

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