Convertibles mostly flat in quiet trade; LinkedIn improves on upgrade; Micron in line

By Rebecca Melvin

New York, July 15 – U.S. convertibles traded mostly flat, or in line with their underlying shares, on Wednesday as equity indices toggled between gains and losses but ultimately ended in the red.

A top volume name in trade was LinkedIn Corp., which was lifted a little bit by an upgrade on the shares to “overweight” from “equal weight” by Barclays.

Micron Technology Inc.’s convertibles were flat on swap, or a bit lower on an outright basis, as shares pulled back following a gap up on Tuesday amid takeover chatter.

The Micron bonds were still seen to have gained on the buyout rumor as have the convertibles of the Milpitas, Calif.-based flash memory chip maker, SanDisk Corp.

“They have richened a little bit after the fact on the Micron news. In theory, it is in play as well,” a New York-based trader said.

In the energy sector, there was some Whiting Petroleum Corp. trading. In the early going shares of the Denver-based oil and natural gas exploration and production company were little changed, and the Whiting 1.25% convertibles traded at 103.75 versus an underlying share price of $30.48, a sellsider said.

But shares fell nearly 5% in afternoon trading, closing down $1.48, or 4.9%, at $29.00. It was not immediately known where the bonds ended the day.

“Not a ton was trading” in convertibles, a New York-based trader said of the overall session. And a second source on one trading desk said the firm was doing trades of small size, or under $1 million, mostly.

Nevertheless, lower crude oil prices were pulling down the shares of energy companies Wednesday afternoon.

West Texas Intermediate crude oil for August delivery fell 2.6% to $51.64 per barrel, and Brent crude was down 2.2% to $57.20.

Investors were digesting the implications of the Iran nuclear deal signed Tuesday by the United States the United Kingdom, Russia, China, Germany, France and Iran. The deal includes lifting of economic sanctions and restrictions the Islamic nation currently faces against selling its oil freely on the global market.

Goldman Sachs has estimated that Iran could supply an extra 200,000 to 400,000 barrels of oil per day in 2016.

Meanwhile, the Energy Information Administration Wednesday released data showing crude inventories fell by 4.3 million barrels last week. Analysts were expecting a decline of 1.2 million barrels.

Penn Virginia Corp. shares fell back 13% on Wednesday after rising 12% on Tuesday. Shares of the Radnor, Pa.-based oil and gas company closed at $3.14.

LinkedIn edges up on swap

LinkedIn’s 0.5% convertibles due 2019 were quoted at the end of the session at 103 bid, 103.125 offered versus the underlying shares at $218.54, a New York-based trader said.

They were active and a little better by about 0.25 point on swap on the upgrade news, the trader said.

Shares of the Mountain View, Calif.-based business-oriented social networking service added $4.66 cents, or 2.2%, on the day.

Barclays, which boosted its rating and raised its price target to $250 per share from $225 per share, said that LinkedIn’s’ first-quarter results were affected by transitional issues and not structural ones, and that the second quarter, while not expected to be a major improvement, will boost the potential for the second half and in 2016 for the company to meet estimates.

Micron in line

Micron’s 3% convertibles due 2043 were about a point lower early in the session at 92 on shares that were nearly 3% lower at $19.06. They closed around 91.25 with shares down 72 cents, or 3.7%, at $18.89.

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.

The Micron convertibles have expanded a bit on the rumor, but “nobody expects it to happen,” a trader said regarding the bid.

He said that the rumored offer price of $21.00 per share was too low. “The shares were at $35.00 six months ago, so no one is itching to sell,” he said.

Mentioned in this article:

LinkedIn Corp. Nasdaq: LNKD

Micron Technology Inc. NYSE: MU

Penn Virginia Corp. NYSE: PVA

SanDisk Corp. Nasdaq: SNDK

Whiting Petroleum Corp. NYSE: WLL

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.