Morning Commentary: Stronger bid in convertibles as stocks improve; AMD gains; oil prices up

By Rebecca Melvin

New York, Sept. 22 – U.S. convertibles saw a stronger bid early Thursday as equity markets gained again following the Federal Reserve’s decision to leave interest rates unchanged, saying the case for a rate increase had strengthened but a go-slow approach remains in place.

In addition to higher common stocks, Treasuries and oil prices were higher.

There was “not a whole lot trading. I’m hearing that everything is bid for,” a New York-based trader said of the convertibles space.

Advanced Micro Devices Inc.’s 2.125% convertibles due 2026 traded up to 103.75, which was up about a point on the day on an outright basis, according to Trace data. Shares of the Sunnyvale, Calif.-based chip maker rose more than 1% to $6.36.

AMD priced $700 million of the 10-year convertible senior notes at the beginning of this month.

Oasis Petroleum Inc.’s 2.625% convertibles due 2023, which priced last week, jumped to close to 102 after slumping earlier in the week to well below par. Oasis shares jumped 27 cents, or 2.8% to $9.785. On Tuesday, the stock had dropped 3% to $8.88.

Oil prices were up 2% in the early going Thursday after an unexpected drop in U.S. crude inventories reported late Wednesday. The U.S. Energy Information Administration reported a 6.2 million barrel drop in crude inventories last week, the third straight drop in inventories this month.

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