Hess mandatories slip with higher oil; NXP moves lower; market activity ‘super quiet’ overall

By Rebecca Melvin

New York, July 25 – Hess Corp.’s 8% mandatory convertible traded down on Wednesday amid a jump in oil prices, and there were a few other mandatories trading, perhaps in tandem with upcoming maturities.

The mandatories of the New York-based oil and gas producer pared early losses with a rebound in the stock markets late in the session. The mandatories closed down 73 cents, or 1%, to $71.84 with the common shares off only 18 cents, or 0.3%, to $64.88. Early Wednesday, the mandatories were down 3% at $70.38, while Hess shares were down 1.6% at $64.04.

The price of the front-month contract of West Texas Intermediate crude oil gained 72 cents, or 1.1% to $69.23 on the New York Mercantile Exchange after U.S. Energy Information Administration oil data showed U.S. commercial crude stocks fell sharply last week.

Overall market activity was surprisingly quiet, a New York-based market source said.

“And there was no clear cut market direction,” he said, adding that activity in mandatories was likely related to investors trimming positions prior to end-of-life mandatory conversions.

Most of the market-moving news came near or after the market close.

U.S. president Donald Trump announced that the United States and the European Union agreed to resolve tariffs on steel and aluminum, saying that the relationship between the two entities has reached a new phase, and stocks soared.

Also at the market close, Qualcomm Inc. said it plans to scrap its merger agreement with NXP Semiconductors NV because the San Diego-based chipmaker wasn’t able to get China’s approval for the deal, which dates back to 2016.

When announcing a merger finalization extension in April, Qualcomm said that China had until July 25 to decide on the deal and that if it wasn’t approved the company would not extend again and instead would pay NXP the $2 billion deal termination fee to walk away.

The Qualcomm decision follows a round of last-minute lobbying by U.S. officials on the company’s behalf. Treasury secretary Steven Mnuchin and Commerce secretary Wilbur Ross tried to persuade Chinese officials to separate the deal’s approval process from current trade tensions, but it seems to no avail.

NXP Semiconductors’1% convertibles traded down during the trading session as did the common shares of the Dutch semiconductor company as market players continued to watch for a China approval.

China was the last of nine markets that need to approve the Qualcomm and NXP merger, and the fact that it had been bogged down there points to another consequence of the conflict between the United States and many of its trading partners, including China.

NXP’s 1% convertibles due 2019 moved down in active trade to 113.25 last on Wednesday from about 115 on Tuesday, according to Trace data. NXP shares closed down again, ending off $2.29, or 2.3%, to $98.37, after dropping 4.2% on Tuesday.

U.S. stocks moved sharply higher late Wednesday despite trade tension uncertainty earlier in the day. The markets turned upbeat when European Commission president Jean-Claude Juncker’s visit to the White House began without bitterness and surged later when Trump said that the United States planned to resolve its dispute over metals duties with the European Union.

Mentioned in this article:

Hess Corp. Nasdaq: HES

Hess mandatory Nasdaq: HES: PRA

NXP Semiconductors NV Nasdaq: NXPI

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