Morning Commentary: Convertibles trade mostly in line, Micron slips back a little

By Rebecca Melvin

New York, July 15 – U.S. convertibles traded mostly in line and quietly early Wednesday as equities recovered from early weakness to trade in positive territory.

Federal Reserve chairman Janet Yellen was on Capitol Hill and told lawmakers that a rate hike is still in the cards for later this year given encouraging signs in the economy.

Among convertibles trading were those of LinkedIn Corp., BioMarin Pharmaceutical Inc., Illumina Inc. and Micron Technology Inc.

The Micron 3% convertibles were about a point lower at 92 on shares that were nearly 3% lower at $19.06. The notes had been active on Tuesday after reports that the Boise, Idaho-based chipmaker was going to be getting a takeout offer from China’s Tsinghua Unigroup chip maker as early as Wednesday.

Among airline convertibles, Southwest Airlines Co.’s 5.25% convertibles due 2016 were quoted at 246.5 versus a share price of $33.86, which was Tuesday’s close, a New York-based sellsider said.

The Southwest bonds are infrequently traded and the level quoted was not far off of previous markets, the sellsider said.

Delta Air Lines Inc. reported solid second-quarter earnings early Wednesday, but its shares were lower by a little more than 1% as it pointed to a drop in third-quarter revenue.

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