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Morning Commentary: Convertibles better bid after jobs data; Cypress Semiconductor adds on swap
By Rebecca Melvin
New York, July 8 – U.S. convertibles were better bid early Friday as equities jumped following better-than-expected U.S. jobs data.
“On a relatively light-volume day, things were better to buy, post the jobs numbers,” a New York-based trader said.
“More balanced convertibles are definitely better. But it’s been mostly small trades,” the trader said, characterizing the day as a “generic, slow-market melt up.”
Cypress Semiconductor Corp.’s 4.5% convertibles due 2022, which priced last month, traded at 107.375, according to Trace data, and were called about 0.5 point better on swap against Cypress shares, which were up 40 cents, or nearly 4%, at $10.50.
Buzz is surrounding the name related to “an article in the Financial Times, which wasn’t particularly helpful,” but sparked interest, the trader said of Cypress.
FireEye Inc.’s sister convertible bonds, each $460 million in size, traded early Friday. The FireEye 1.625% series B convertibles due 2035 traded at 90.25, which was up 1.5 points on an outright basis, according to Trace data.
The FireEye 1% series A convertibles due 2035 traded at 91.75.
Shares of the Milpitas, Calif.-based network security company were up 20 cents, or 1.3%, at $16.20.
In economic news, the Labor Department reported that the U.S. economy added 287,000 jobs in June, which was better than the 180,000 jobs economists expected. It represented a strong bounce back from May, when only 38,000 jobs, revised down to just 11,000, were added. The unemployment rate rose to 4.9% from 4.7%, reflecting a jump in the number of people in the labor force.
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