Morning Commentary: Hercules Capital trades flat ahead of earnings; Trinity Industries eyed

By Stephanie N. Rotondo

Seattle, July 31 – As July looked to turn the page to August, trading in the convertible bond market was limited on Monday.

A trader noted that Hercules Capital Inc.’s 4.375% convertible notes due 2022 were trading, though the “stock barely moved.

“A dividend should be declared this week, but that shouldn’t affect the price,” he said.

The trader placed the notes in a 102.875 to 103 range. Another market source echoed that level, deeming it unchanged to slightly better.

The underlying equity (NYSE: HTGC) was up 4 cents at mid-morning, trading at $13.34.

The Palo Alto, Calif.-based specialty finance company is slated to announce its second-quarter results later in the week.

Meanwhile, Trinity Industries Inc.’s 3.875% convertible notes due 2036 were also on the move.

“A dealer made a few sales at $123.25 versus $27.50 on a 70 delta,” a trader said.

The stock (NYSE: TRN) was seen rising a dime to $27.55.

There was no fresh news out on the Dallas-based industrial company, however, to cause the movement.

In the mandatory convertible space, Crown Castle International Corp.’s $1.65 billion of 6.875% series A mandatory convertible preferred stock was admitted to the New York Stock Exchange on Monday.

The ticker symbol is “CCIPrA.”

The deal came July 19, with $1.5 billion of the preferreds being sold. A $150 million greenshoe was exercised on July 26, bringing the total amount outstanding to $1.65 billion.

Morgan Stanley & Co. LLC, BofA Merrill Lynch, J.P. Morgan Securities LLC, Barclays and RBC Capital Markets LLC ran the books.

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