Transocean slips; Ctrip.com expands; Colfax mandatory trades amid light activity

By Rebecca Melvin

New York, Aug. 23 – There was follow-on trading in Transocean Ltd.’s 0.5% convertibles due 2023 on Friday after a big block came into play on Thursday. But many other names went silent heading into one of the last summer weekends of the season.

The Transocean notes were bouncing around in the 80 to 82 range for the past several sessions, and they held in pretty well in the early going, but they eventually slipped to the bottom of that range amid a drop in oil prices and the underlying shares. The notes last traded at 80.75, according to Trace data, which was down from early in the session when a print went up at 81.195. That was still higher than their level around mid-August, which sported a 79 handle.

Shares of the Zug, Switzerland-based oilfield services company were down 29 cents, or 6.4%, at $4.25 early Friday amid a broader drop in the equity markets.

The Transocean note has a premium of about 85%, which means that it is still equity sensitive. But it is unsecured, so it trades wider than much of the company’s other paper, and it seems to be trading cheaper than some other 2023 paper such as the 9% notes of 2023, a market source told Prospect News.

Ctrip.com International Ltd. was also observed in trade, and its series C and D convertibles, or the Ctrip.com 1% convertible and 1.99% convertible, respectively, were seen to have expanded slightly by about 0.25 point with selling in the underlying shares. Shares of the Shanghai-based travel services company slipped $1.18, or 3.5%, to $32.14.

Among mandatory and preferred shares, Colfax Corp.’s 5.75% tangible equity units, Becton Dickinson and Co.’s 6.125% mandatory convertible preferred stock, of which there are $2.48 billion, and Southern Co.’s 6.75% equity units, of which there are $1.73 billion, were the volume leaders in that segment of the market. All of the common shares of those companies were off, with the Colfax shares down the most, falling 3.1% on the day.

Elsewhere, the market was pretty quiet, several New York-based market sources said.

“Very light trading, which was to be expected,” one source said regarding Friday’s session.

The broader markets were ruminating on trade and rate concerns again, and the major stock indices were down sharply after China said it will impose tariffs on $75 billion more of U.S. goods. China also said it will resume tariffs of 25% on U.S. vehicles and 5% on U.S. auto parts starting in December. The back and forth trade actions include the United States’ tariffs imposed on $300 million of Chinese goods.

Oil prices fell amid fears that the tariffs will contribute to the slowing global economy. Meanwhile, bonds were higher and the debate on rates continued.

Federal Reserve chairman Jerome Powell said on Friday that the Fed is prepared to provide more stimulus if global economic slowing begins to pinch in the United States. The comment came in prepared remarks at the central bank’s annual Jackson Hole, Wyo., retreat.

Radius Health Inc. was an interesting name that was seen in trade this past week. The sub-par issue added a little as did the shares of the Waltham, Mass.-based biopharmaceutical company.

Radius Health’s 3% convertible due 2024 traded at 89.5 last on Thursday. Since then shares were off slightly, down 19 cents, or 0.8%, at $23.68.

The underwriters for Proofpoint Inc.’s 0.25% five-year convertible bonds exercised their $120 million over-allotment option in full, lifting the total size of the issue to $920 million, according to an 8-K filing with the Securities and Exchange Commission.

As previously reported, Proofpoint priced an upsized $800 million of the convertibles after the market close on Tuesday at par with an initial conversion premium of 37.5%.

The Rule 144A offering was upsized from an expected $750 million deal size.

Mentioned in this article:

Becton Dickinson and Co. NYSE: BDX

Colfax Corp. NYSE: CFX

Ctrip International Ltd. Nasdaq: CTRP

Proofpoint Inc. Nasdaq: PFPT

Radius Health Inc. Nasdaq: RDUS

Southern Co. NYSE: SO

Transocean Ltd. NYSE: RIG

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