Outright convertible players add 1.9% for January, Citigroup says

By Rebecca Melvin

New York, Feb. 4 - Outright convertible investors and hedge funds outperformed other asset classes in January, with outright convertible funds returning 1.9% for the month, Citigroup's U.S. convertibles sales and trading team wrote in a report published Friday.

The team wrote that according to Hedge Fund Research, convertible arbitrage funds were positive by about 1.4%.

Meanwhile, January was a weak month in terms of new supply, the Citigroup convertibles team said.

The $2.1 billion in six new deals tallied by Citigroup didn't match the $2.6 billion that came out of the market in January redemptions, amounting to a market contraction of about $500 million.

Among the month's calls were Teva Pharmaceutical Industries Ltd.'s 1.75% convertibles, Level 3 Communications Inc.'s 5.25% convertibles and GMX Resources Inc.'s partial tender for its 5% convertibles, the Citigroup team noted.

A pair of big issues maturing in February, including Amgen Inc.'s 0.125% convertibles and PNC Financial Services Group Inc.'s 4% convertibles, will put gross market outflows at more than $4 billion in the month, the Citi convert team noted.

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