Convertibles improve after Fed raises rates; Pandora gains after ruling; Navistar lower

By Rebecca Melvin

New York, Dec. 17 – Despite a swing lower in U.S. equities on Thursday, convertibles remained better across the board on the heels of the first Federal Reserve rate hike since 2006.

“They were better to buy; people are pleased,” a New York-based trader said, meaning that there were more bids to buy convertibles in the market than offers to sell them.

A second trader said that the convertibles market was “a lot better” in the early going. On average, convertibles were 0.25 point better, he said. But stocks were higher in the early going, and then fell to a sharply lower close.

When stocks “rolled over,” convertibles leveled off to slightly weaker levels, the trader said.

Pandora Media Inc.’s convertibles expanded on swap by 1.5 points to 2 points after a ruling by the copyright royalty board that was more favorable for Pandora than some had feared.

The internet radio company, along with others of its ilk, will pay more for music played, but not as much as record companies and artists had hoped.

“There really were no other standout name besides Pandora,” a New York-based trader said about Thursday’s secondary market.

Navistar International Corp.’s convertibles were indicated lower after the Lisle, Ill.-based trucking company reported a fourth-quarter net loss, but earnings excluding items that exceeded estimates.

Shares of the Lisle, Ill.-based trucking company popped initially but then slid throughout the session to end 1.7% lower.

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