Countrywide holds steady; XM up on merger speculation; Calpine rocked some more; usual suspects rounded up

By Evan Weinberger

New York, Sept. 12 - Countrywide Financial Corp., Boston Properties Inc. and Vornado Realty Trust convertibles all were fairly active Wednesday as volume continued to pick up. Amgen Inc. and Molson Coors Brewing Co. rounded out some of the usual suspects that traded on the day.

Technology convertibles were also fairly popular, as Hutchinson Technologies Inc. and XM Satellite Radio Inc. all moved, although the prices for the most part stayed in line with previous activity.

And Calpine Corp. convertibles were hammered, along with other paper issued by the energy producer as it continues to chart its recovery.

Overall, activity in the secondary market appears to be picking up as the week wears on.

"The numbers are just larger," one analyst said. "It's not that the names are so surprising. I saw a bunch of them with very large numbers."

Opinions about whether the uptick would be sustained or whether the increased activity was the result of a crush to get something done before the Jewish holidays were mixed.

One analyst said that the pickup was "real," although it was unclear what exactly sparked the turnaround.

Others were a little more skeptical. "No, unless it's people just wanting to get done before the holiday," a second analyst said when asked why volume has increased as the week has gone on.

A trader, when asked how the market was doing in the afternoon, said simply, "Feeling like everyone has left for temple."

Activity could be picking up because people are starting to settle back in. Credit markets have stabilized a bit, at least when compared to the nastiness of August, a third analyst said. And people may be getting back in the mood to trade as the quarter moves to the end. "I still don't think people were back from the holiday last week," he said. "I think people are more settled in to the fall mode."

Continuing a recent trend, General Cable Corp. announced a coming convertible without putting any specific timing or pricing talk. The $450 million in senior convertibles will partly finance Highland Heights, Ky.-based General Cable's acquisition of Freeport-McMoRan Copper & Gold Inc.'s cable and wire unit. That deal, also announced Wednesday, is for $750 million.

There was no talk yet on the coupon or initial conversion premium, as market watchers said it was simply too early to put any numbers on it yet.

General Cable makes and distributes copper, aluminum and fiber optic wire and cable. The company said a portion of the proceeds would go toward expanding its operations and for general corporate purposes.

And from Germany, Infineon Technologies Investments BV, a subsidiary of Munich-based Infineon Technologies AG, a semiconductor producer, announced that it will price exchangeable notes equal to 17 million shares of Qimonda AG American Depositary Shares. Infineon said the 25 million ADSs, plus a 3.75 million ADS greenshoe, of Qimonda are yet to price as well, although a source close to the deal said they expected pricing to occur on or around Oct. 20.

The deal is part of Infineon's effort to partially divest itself from its stake in Munich-based semiconductor memory component-maker Qimonda. Infineon currently owns 86% of Qimonda and with their actions will hold a roughly 77% stake in the firm.

The announcement drove down Infineon stock in Germany.

On the American side, stock markets were mixed as indexes hovered within a 30-point margin, give or take a few, of the break even point on the day.

The Dow Jones Industrial Average slipped 16.74 points, or 0.13%, to 13,291.65.

The Nasdaq was also down a bit, closing at 2,592.07, a dip of 5.40 points, or 0.21%.

The Standard & Poor's 500 was all but flat Wednesday. The index picked up 0.07 points, or a robust 0%.

Financials in play

At least one of Countrywide's convertibles managed to nudge forward a bit Wednesday. The Calabasas, Calif.-based mortgage lender saw its Libor minus 350 basis points series A convertible senior debentures due April 15, 2037 close Wednesday at 89.64 versus a closing stock price of $16.62. They finished trading Tuesday at 89.5 versus a stock price of $16.88.

Countrywide's Libor minus 225 bps convertible senior debentures due April 15, 2037 close at 86.55 versus a stock price of $16.62. They finished trading Monday at 86.75 versus a stock price of $17.21.

Countrywide stock (NYSE: CFC) fell again Wednesday, giving up 26 cents, or 1.54%.

Also in the financial realm, Boston-based office real estate investment trust Boston Properties saw its 2.875% exchangeable senior notes due Feb. 15, 2037 take a tumble. The convertibles finished trading at 107.88 versus a closing stock price of $95.19. They finished trading Tuesday at 180.375 versus a stock price of $95.66.

Boston Properties stock (NYSE: BXP) slid 47 cents, or 0.49%, on Wednesday.

Vornado Realty Trust, a New York-based REIT, saw its convertibles finish the trading day mixed. The REIT's 2.85% convertible senior debentures due April 1, 2027 closed Wednesday at 92.5 versus a closing stock price of $103.50. They finished trading Tuesday at 92.875 versus a stock price of $103.92.

On the other hand, Vornado's 0.875% exchangeable senior debentures due April 15, 2026 closed at 96.88 versus a stock price of $103.50. They closed Tuesday at 96.25 versus a stock price of $103.92.

Vornado stock (NYSE: VNO) closed down 42 cents, or 0.40%.

Amgen bucks biotech trend

Biotechs all traded up, according to one analyst. But the analyst said the gains ranged from "slightly" to "marginally."

One exception to that rule was Amgen. Both of the company's convertibles were up more than 3%. Amgen's 0.125% convertible senior notes due Feb. 1, 2011 closed at around 92.75 versus a closing stock price of $55.64. Amgen's 0.375% convertible senior notes due Feb. 1, 2013 closed at 91 versus a stock price of $55.64.

The Thousand Oaks, Calif.-based biotech saw its stock (Nasdaq: AMGN) pick up $1.76, or 3.27%.

Tech convertibles on the move

Hutchinson Technologies, the Hutchinson, Minn.-based computer disk drive components manufacturer, saw both of its convertibles move up Wednesday.

The firm's 3.25% convertible subordinated notes due Jan. 15, 2026 closed at 92.75 versus a closing stock price of $24.87. They closed Tuesday at 91.25 versus a stock price of $24.50.

Hutchinson's 2.25% convertible subordinated notes due March 15, 2010 nudged up to 97.13 versus a $24.77 share price after closing Tuesday at 97 versus a stock price of $24.50.

Hutchinson stock (Nasdaq: HTCH) gained 37 cents, or 1.51%, on Wednesday.

XM Satellite Radio convertibles and stock both moved up on increased speculation that its merger with Sirius Satellite Radio would be coming sooner rather than never. XM's 1.75% convertible senior notes due Dec. 1, 2009 moved up to 87.13 versus a closing stock price of $14.21. They finished Tuesday at 86.125 versus a stock price of $13.62.

Washington, D.C.-based XM stock (Nasdaq: XMSR) picked up 59 cents, or 4.33%, on Wednesday.

Calpine hammered

In the tough day category, Calpine Corp. convertibles joined with the rest of the San Jose, Calif.-based alternative energy producer's paper in slumping Wednesday. The company continues to struggle to get back on its feet after declaring bankruptcy in December 2005.

The company's 4.75% convertible senior unsecured notes due Nov. 15, 2023 closed Wednesday at around 95 versus a closing stock price of $1.39. They had, in recent weeks, been up around 103.

Calpine's 7.75% convertible notes due June 1, 2015 closed Tuesday at around 94 versus a stock price of $1.39. They, too, had been up a bit over par in recent weeks.

And Calpine's 6% convertible senior unsecured notes due Sept. 30, 2014 closed at around 83 versus a stock price of $1.39. Those convertibles were trading at around 90 in recent days.

Calpine stock, which is traded over the counter at ticker symbol CPNLQ.PK dropped 46 cents, or 24.86%, Wednesday.

Round up the usual suspects

One oft-traded convertible made a significant gain Wednesday as Molson Coors' 2.5% convertible senior notes due July 30, 2013 moved up to 107.88 versus a closing stock price of $93.55. They finished trading Tuesday at 106.625 versus a stock price of $90.99.

Stock in Montreal-based brewer Molson Coors (NYSE: TAP) picked up a notable $2.56, or 2.81%, on Wednesday.

But look out, because a Lehman Brothers report released Wednesday said these convertibles are trading a bit rich given increasing volatility and a relatively high vega.

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