Morning Commentary: Cobalt International drifts off; ServiceNow firms on takeover target reports

By Stephanie N. Rotondo

Seattle, Oct. 19 – Trading in the convertible bond market was a little busier on Wednesday morning than the prior day, according to one New York-based trader.

He also noted that there were a few off-the-run names that were being eyed, at least in early trading.

Cobalt International Energy Inc. was one such name.

“When it trades well, it trades great; otherwise it doesn’t trade at all,” the trader said.

He pegged the 2.625% convertible notes due 2019 at 48.5, adding that the paper has been “drifting down from 53” for the last couple of weeks.

As for the equity, it was up 4 cents at $0.95 at mid-morning.

Meanwhile, ServiceNow Inc.’s 0% convertible senior notes due 2018 were seen at 123.33 versus a share price of $80.00.

“The stock is up $3.50,” a trader said. He attributed the increase to reports that the cloud computing company was a takeover target of salesforce.com.

Oasis Petroleum Inc.’s 2.625% convertible notes due 2023 were also “still trading,” continuing the trend set on Tuesday when the oil and gas producer publicly sold 48 million shares of common stock.

But while the paper was somewhat depressed in the previous session, the convertibles were “almost all the way back to where it opened yesterday morning,” a trader said.

He pegged the bonds at 115.36 versus a share price of $11.10.

On the stock side, the securities were up around 5% on the day, which compared to a decline of nearly 6% on Tuesday.

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