Morning Commentary: Convertible trading limited as week begins; active names move with equities

By Stephanie N. Rotondo

Seattle, Oct. 17 – The convertible bond market was muted on Monday as some desks were empty due to the Sukkot holiday.

Mostly, convertibles were moving in line with the underlying equity.

For instance, Anthem Inc., the Indianapolis-based health care company, saw its 2.75% convertible notes due 2042 falling about 3.5 points to 167.175. As for the equity (NYSE: ANTM), it was off $2.71, or 2.25%, at $118.38.

The health care sector has been in focus of late and mostly weaker as preliminary quarterly results have shown that the space did not fare so well in the third quarter.

Meanwhile, Take-Two Interactive Software Inc.’s 1.75% convertible notes coming due Dec. 1 were nearly 14 points higher outright at 237.32. The stock (Nasdaq: TTWO) was up $2.52, or 5.9%, at $45.21.

Last month, the company said it would settle all conversions of the issue entirely in stock. The conversion price is $19.09 a share.

In distressed convertibles, Peabody Energy Corp.’s 4.75% convertible notes due 2041 continued to gain ground.

The notes were seen at 8.125, up 0.375 point.

The stock (OTCBB: BTUUQ) was also performing better, adding 26 cents, or 15.2%, to $1.97.

The name has been trending mostly higher of late, helped by the improving cost of coal.

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