Midday Commentary: Regis, Rayonier convertibles in focus as those shares make big swings

By Rebecca Melvin

New York, Jan. 27 - Company-specific news drove the focus in U.S. convertibles early Monday, but volumes were light, market players said.

Regis Corp.'s convertibles traded around 101.5 with the stock at $12.01 after the Minneapolis-based hair salon operator reported disappointing earnings that missed estimates. Regis shares slumped about 10%. One trader said the Regis 5% convertibles, which mature July 15, 2014, looked to have expanded about a point on a dollar-neutral, or hedged, basis based on a 20% delta.

Rayonier Inc.'s 4.5% exchangeables due 2015 were not heard to have traded after news that the Jacksonville, Fla.-based forest products, fiber business and real estate investment trust plans to spin off its fiber business and become two public companies. The company also reported quarterly earnings. Rayonier shares surged 8%.

The Rayonier exchangeables last traded at 135.

Rayonier said its spinoff was expected to be completed by midyear.

"With an improving U.S. housing market, strong timber exports, and the successful expansion of our cellulose specialties capacity, we concluded that now is the optimal time to pursue the separation of these two non-integrated businesses," Rayonier's chairman, president and chief executive Paul Boynton said in a news release.

Exelixis Inc.'s 4.25% convertibles due 2019, which were active on Friday, traded down on Monday at 150.75, according to Trace data. On Friday, they traded at 155 and 156 and also at 152 and 153.

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