Convertibles mostly quiet, but Exterran, Hologic edge up; Omnicare strong; Telvent to price

By Rebecca Melvin

New York, April 5 - The convertibles bond market Monday saw some activity in Exterran Holdings Inc. and Hologic Inc. But overall trading was pretty sleepy on the day back from a long holiday weekend for Easter.

European markets remained closed Monday for an extended Easter holiday.

Also mentioned in U.S. trade was Omnicare Inc., which saw its 3.25% convertibles due 2035 extend gains from last week, while its shares took a breather despite a general equity market advance on Monday.

Eastman Kodak Co. convertibles were up sharply along with their underlying shares, which surged 13%, Monday amid no particular news. One sellsider reported a trade of the Kodak convertibles at 120 versus a share price of $6.80. Shares of the Rochester, N.Y. digital photography company gained 79 cents, or 13% on the day.

Meanwhile Alcoa Inc.'s convertibles continued to sit comfortably above double par and its shares were little changed after Deutsche Bank cut its rating on the aluminum producer's shares and lowered its profit outlook ahead of next week's earnings report.

In the primary market, Telvent GIT SA launched an offering of $175 million of five-year convertibles via RBC Capital Markets and Barclays Capital that were seen pricing after the market close on Tuesday.

Exterran edges up

Exterran's 4.25% convertible senior notes due 2014 looked to settle a little higher Monday at 129.19 from 128.86 Friday, and following an indicated market Monday of 128.25 bid, 129.25 offered, according to market sources.

Shares of the Houston-based natural gas compression company added 58 cents, or 2.3%, to $25.55, extending gains notched since last week.

"A number of them have traded," a New York-based sellside trader said of Exterran.

He also said Hologic's convertibles were trading. But he was uncertain as to what was behind the paper changing hands.

The stock has been moving "vertically up for the last few days," a Connecticut-based sellside analyst said. Shares of the company closed Thursday at $24.97.

Oil prices shot higher on Monday, and exploration and production companies as well as oilfield equipment companies were all moving higher on the day.

Hologic heading higher

Hologic 2% convertibles due 203, which have been steadily gaining ground, traded slightly higher on Monday and finished with a final trade of 90.168, according to Trace data. Another pricing source had the paper up about 0.25 point.

Shares of the Bedford, Mass.-based diagnostic imaging and surgical products company for women's health care needs ended lower by 19 cents, or 1%, at $18.34.

"These are trading on takeover speculation," a New York-based sellside trader said. "All health care names are trading on takeover rumors. This is a good company. They make a lot of money and there is a potential for a homerun. Also they carry themselves at a low cost of capital."

Omnicare ever better

Omnicare's 3.25% convertibles have been trading higher and on Monday were seen as high as 88 before settling back to little changed at about 86.

Shares of the Covington, Ky.-based geriatric pharmaceutical services company ended little changed at $29.92, which was up 2 cents.

"Someone obviously wants to own them, and has pushed them up quite a bit. The credit is also stronger. With the changes in health care afoot, this could be a nice little upswing for assisted living and health care related companies," a New York-based sellsider said.

In February, the Omnicare 3.25% paper traded at 79 versus a share price of $25.70.

"People want to be long this, and it was lagging a little last week, so it might just be people rotating back into them," the sellsider continued about Monday's action.

But shares of the company weren't moving up with the overall market, "so they might as well be down," another sellsider said.

Alcoa steady to higher

Alcoa's 5.25% convertibles due 2014 were seen a couple of points higher at more than double par, as the shares ended little changed.

The catalyst was a Deutsche Bank downgrade, but there wasn't much of a splash in the convertibles.

"It's not a credit story now," a sellsider said.

Telvent to price

Telvent plans to price $175 million of five-year convertibles after the market close Tuesday that are talked to yield 5% to 5.5%, with an initial conversion premium of 20% to 25%, according to a syndicate source.

The Rule 144A offering of senior subordinated notes has a $25 million greenshoe.

RBC and Barclays Capital are joint bookrunners.

The notes, which mature April 15, 2015, will be non-callable and include full dividend and takeover protection.

Proceeds are earmarked for its subsidiary Telvent DTN to repay a credit agreement in full.

Based in Madrid, Telvent is a global information technology company focused on infrastructure markets.

Mentioned in this article:

Alcoa Inc. NYSE: AA

Eastman Kodak Co. NYSE: EK

Exterran Holdings Inc. NYSE: EXH

Hologic Inc. Nasdaq: HOLX

Omnicare Inc. NYSE: OCR

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