Morning Commentary: Finisar under pressure; OSI steady but subdued; Hornbeck remains weak

By Stephanie N. Rotondo

Seattle, Feb. 17 – There continued to be weakness in the convertible bond market in early Friday trading.

A trader said Finisar Corp.’s 0.5% convertible notes due 2036 were off 3.5 points outright on chatter the fiber optics company was having trouble with one of its products.

The trader pegged the convertibles in a 103.5 to 104 area, as the stock (Nasdaq: FNSR) traded off at least $2.50 in early dealings.

Meanwhile, it seemed investors were taking a bit of a breather on Friday, as there was little follow-through in recently topical names.

OSI Systems Inc.’s $250 million of 1.25% convertible senior notes due 2022 – a deal priced late Wednesday – was barely moving at all, according to a trader who had seen just one round-lot trade in the issue as of mid-morning.

He said the convertibles were steady at par. The stock (Nasdaq: OSIS), however, was down 14 cents at $78.17.

Hornbeck Offshore Services Inc.’s 1.5% convertible notes due 2019 were also seeing little movement, after being traded actively Thursday in the wake of a liquidity warning.

That warning sent the convertibles down about 4 points outright, while the company’s equity declined 22% in early trading.

Come Friday, the convertibles were still lower, losing about half a point to trade at 71, but liquidity was much more subdued.

The stock (NYSE: HOS) also remained weak, falling 12 cents, or 2.63%, to $4.62.

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