Convertibles higher outright, but quiet; Amgen steady; Trico Marine down; LifePoint weaker

By Rebecca Melvin

New York, Feb. 19 - The convertible bond market was up 1.53% for the week on an outright basis, with upward movement driven by higher equities and the high-yield-bond market; while convertible arbitrage was down 0.1%, according to Barclays Capital indices Friday.

For the week, the S&P 500 stock index was up 2.7% and the high-yield market was up 1.1%, according to Barclays.

Convertibles trading was slow, sources said, probably due partially to the holiday-shortened week that encouraged players to take additional time off, and leaving convertibles trading desks thinly manned. Markets were closed on Monday in observance of Presidents Day.

But the market was quiet the previous week, too, a New York-based sellside trader pointed out, with investors keeping money on the sidelines amid economic uncertainty and the lack of a new issue calendar.

"Volume was pretty light, and on balance, convertibles were probably a little better for sale," the sellsider said of the last week.

Liquid securities favored

Much of the volume was concentrated in liquid, investment-grade names, while a handful of convertible bond names were notably active on company-specific news.

Amgen Inc. was a liquid, investment-grade name that was active Friday. The two Amgen convertible issues appeared to be trading outright, with prices little changed against a share price that was up less than a quarter of a percentage point.

Also on Friday, Trico Marine Services Inc.'s convertibles extended a downturn, after being among the top volume names in trade on Thursday when its reported earnings reflected soft oilfield market conditions.

LifePoint Hospitals Inc. was not actively trading and seen only in "odd lots" on Friday after weakening on Thursday. The Brentwood, Tenn.-based rural hospital owner and operator reported a profit that beat estimates and revenue that was in line with estimates.

New supply absent

"People are sitting on their hands. There's no new issue calendar, and there has been concern about redemptions and about the situation in Greece. People don't want to put money to work in this kind of environment, and there's nothing to sell either," a New York-based sellside trader said.

The broader markets Friday seemed to shake off news that the Federal Reserve raised the discount interest rate by a quarter percent to 0.75%.

One sellside analyst said that historically the discount rate has been higher than the funds rate, which is currently between 0% and 0.25%, so the move simply represented a return to normalcy.

Nevertheless there was still uncertainty regarding whether the move represented a tightening or not.

One sellsider suggested that the potential for higher interest rates might spur would-be issuers into making offerings now rather than later.

With no new convertibles issuance in the U.S. market in the past week, market sources agreed that a new issue calendar was needed to help jumpstart the market.

Trico Marine active, lower again

Trico Marine's 8.125% convertibles due 2013 traded Friday at 76, which was down another 1.25 point from Thursday, when the paper traded at 77.5, down from 80 on Wednesday.

Shares of the Woodlands; Texas-based subsea services provider stood at $2.90 at the end of Friday.

Trico Marine's 3% convertibles due 2027, which are callable in 2012 and putable in 2014, fell another 4 points to 38 on Friday, compared to about 42.5 on Thursday, according to Trace data.

Trico Marine said it lost $129 million for the latest quarter, after a charge of $120 million relating to impairments and costs associated with early termination of a vessel contract.

Revenue for the fourth quarter was $150.8 million, which was down sequentially from $189.9 million in the third quarter due mostly to lower usage of subsea vessels, related to seasonality in the North Sea, and weak market conditions in the North Sea and Asia Pacific regions.

The company's outlook continues to reflect weakness in the North Sea and the Asia Pacific region, but "we are encouraged by certain recent developments which we anticipate will be reflected in our results commencing in the second quarter," chairman and CEO Joseph S. Compofelice said in a news release.

Trico Marine has about two-thirds of its 2010 expected revenue under contract with promising prospects for the rest.

The company is pursuing transactions to increase liquidity to levels sufficient to meet its commitments, including additional sales of non-core OSV assets.

LifePoint quiet, weaker

LifePoint's 3.5% convertibles were 91.518 bid, 91.625 offered versus a share price of $30.40 on Thursday when they weakened in action, and there were no trades to speak of on Friday, a New York-based sellsider, generally active in the name, said.

"There were only odd lots, and no bid, ask market at the moment," he said.

"Recent trades took place at 91.08 versus $29.37 on Feb. 9, and at 91.5 bid, 91.66 offered versus $29.99 on Feb. 4, so these have been coming in over the past few weeks," the sellsider said.

Shares of the rural hospital owner and operator jumped $1.55, or 5.1%, to $31.95 on Friday after the company reported fourth-quarter net income rose to $38 million, or 70 cents per share, from $28 million, or 53 cents per share, a year earlier.

Earnings from continuing operations were 71 cents per share, which was 11 cents above analysts' estimates.

Revenue rose almost 11% to $746.9 million.

Mentioned in this article:

Amgen Inc. NYSE: AMGN

LifePoint Hospitals Inc. Nasdaq: LPNT

Trico Marine Services Inc. Nasdaq: TRMA

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