New Renewable Energy adds on hedge in active trade; old bond gains; Palo Alto down as shares drop

By Rebecca Melvin

New York, May 27 – U.S. convertibles were fairly active on Friday, boosted by the week’s new convertible issuance, company-specific news and higher equity markets.

The action was despite the fact that it was the last session before the Memorial Day weekend, when activity is usually diminished by early exits to make the most of an extra day off. Financial markets will be closed on Monday in observance of the holiday.

Renewable Energy Group Inc.’s newly priced 4% convertibles added on both an outright and dollar-neutral, or hedged, basis after the Ames, Iowa-based biodiesel producer priced an upsized $132 million of the 20-year senior notes at the cheap end of talked terms.

The new Renewable Energy convertibles were at 103 on an outright basis with the company’s shares a little higher, a market source said. On a dollar-neutral basis, the new bonds were at 101 versus a stock price of $8.62, which was Thursday’s closing stock price.

Renewable Energy’s older notes, the 2.75% convertibles due 2019 – a portion of which will be bought back with proceeds of the new deal – were also higher. They traded at 96.25, which was up 7.7 points from their previous level, according to Trace data.

In established issues, Palo Alto Networks Inc.’s 0% convertibles due 2019 dropped in active trade as its stock plunged following the Santa Clara, Calif.-based cyber security company’s disappointing guidance for the current quarter.

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