Convertibles quiet; Ctrip.com convertibles trade in range; maturing Citrix notes active

By Rebecca Melvin

New York, April 10 – The convertibles space was quiet at mid-week on Wednesday with one market source pointing to a lull setting in ahead of earnings season.

“It’s super quiet,” a New York-based market sellsider said.

The lull will likely continue for the rest of the week, he said. “The banks, JPMorgan and Wells Fargo, will kick us off on Friday, and then next week a few names will start to report,” he said, regarding convertibles issuers reporting earnings.

“I also think everyone is watching the bank CEOs get grilled down in Washington,” he said, referring to the chief executives of Citigroup, JPMorgan and other banks testifying before the House Financial Services Committee on Wednesday.

Lawmakers queried the leaders of the seven largest U.S. banks about new threats to the financial system and other issues. The executives told the committee that the financial system is less risky with tighter oversight than 10 years ago before and during the financial crisis.

When asked about potential risks to the financial system now, some of the executives pointed to leveraged lending. The Federal Reserve and other regulators, which tightened oversight and restricted bank activities in the aftermath of the crisis, are in the middle of rolling back some controls put in place at that time, including simplifying compliance with the Dodd-Frank Volcker Rule, which regulates the banks’ trading risk. Those rollbacks are concerning to some lawmakers.

There were a few Ctrip.com International Ltd. convertible bonds trading in line, but activity in those issues was lighter than on Tuesday. On Tuesday word that the online travel services company is planning to price $800 million of new convertibles, possibly as soon as this month, sparked trading.

The Ctrip.com 1% notes due 2020 traded up to 103.2 on Wednesday according to Trace data, which was higher than 102.875 last on Tuesday but within its recent range. Shares were off slightly.

The Ctrip.com 1.25% notes due 2022 were 102.1.

Citrix Systems Inc.’s 0.5% convertible notes, which mature on April 15, 2019, were trading again as outright players continue to convert out of the notes ahead of the maturity. The issue is a large one for the convertibles space, and market players would like to see new issuance bump up to replace it.

The Fort Lauderdale, Fla.-based cloud computing solutions company priced $1.25 billion of the senior notes in 2014.

Mentioned in this article:

Citrix Systems Inc. Nasdaq: CTXS

Ctrip.com International Ltd. Nasdaq: CTRP

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