Convertibles quiet after softening earlier in the week; energy names in focus, weaker

By Rebecca Melvin

New York, Sept. 15 – U.S. convertibles were trading a bit quieter on Thursday on the heels of softening in the market earlier in the week and as some of the newer big issues settled into the fabric of the secondary market, a Connecticut-based convertibles trader said.

There was also some focus on energy names as oil prices dropped this week, although oil pricing was stable and up from Wednesday.

Energy names that have traded included Cobalt International Energy Inc. and Weatherford International Ltd. The Cobalt convertibles were active on Wednesday and a bit weaker and traded again on Thursday. The Cobalt 2.625% convertibles due 2019 were unchanged at 45, and the Cobalt 3.125% convertibles traded at 37.75.

Part of the softening was attributed to a big windfall of supply that hit the market last week. Five new deals launched and priced in the U.S. convertibles primary market for $2.33 billion in base-deal proceeds, or $2.61 billion if over-allotment options are exercised.

Among those deals were Ctrip.com International Ltd.’s $900 million of 1.25% convertibles due 2022 and Advanced Micro Devices Inc.’s $700 million of 2.125% convertibles due 2026.

The AMD convertibles have toggled slightly above and below par in the past two days. They were last at 99.10.

A couple of energy issuers also came to market in the past week: Denver-based PDC Energy Inc. priced a $175 million issue of 1.125% convertibles due 2021, and early Wednesday Houston-based Oasis Petroleum Inc. priced $275 million of 2.625% convertibles due 2023.

On Thursday, crude oil for October delivery settled up 33 cents, or 0.8%, to $43.91 a barrel on the New York Mercantile Exchange. Brent crude oil gained 74 cents, or 1.6%, to $46.59 a barrel. Pipeline and refinery outages were cited for helping oil prices recoup some losses from earlier in the week.

Nevertheless, recent issues remained the primary focus of traders on Thursday, a New York-based trader said, adding Insulet Corp. and DISH Network Corp. to the names that were somewhat active.

Insulet priced $300 million of 1.25% convertibles last week, and DISH priced $3 billion of 3.375% convertibles in early August.

Mentioned in this article:

Advanced Micro Devices Inc. NYSE: AMD

Ctrip.com International Ltd. Nasdaq: CTRP

Cobalt International Energy Inc. NYSE: CIE

DISH Network Corp. Nasdaq: DISH

Insulet Corp. Nasdaq: PODD

Oasis Petroleum Inc. NYSE: OAS

PDC Energy Inc. Nasdaq: PDCE

Weatherford International Ltd. NYSE: WFT

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