Convertibles see better buyers; Jazz Pharmaceuticals outperforms; Royal Gold holds gains

By Rebecca Melvin

New York, Aug. 20 – U.S. convertibles saw better buying interest Wednesday, reversing course from recent sessions and following a strong new issue calendar last week that left the market “sloppy.”

“Everything got sloppy last week with the deals,” a New York-based trader said.

Buyers decided to step in amid positive market momentum and relatively firm equity markets, a second New York-based trader said.

A third trader qualified the commentary that there were better buyers in the market on Wednesday, saying instead, “Less to sell, maybe. People have been sellers for weeks.”

There were decent amounts trading in recent new issues like Priceline Group Inc. and Jazz Pharmaceuticals plc. The Jazz bonds outperformed their underlying stock.

Restoration Hardware Holdings Inc. was also active, with the 0% convertibles better by 0.25 point to 0.5 point on a dollar-neutral, or hedged, basis and seen wrapped around par at the close.

“They finally kind of bottomed out and moved up a little,” a trader said of Restoration Hardware.

Royal Gold Inc. was active both Tuesday and Wednesday, and those bonds held a 0.375 point to 0.5 point gain notched Tuesday, a trader said.

Meanwhile, Molycorp Inc.’s convertibles were mixed in active trade, as the divergence among the bonds continued and as shares of the Greenwood Village, Colo.-based miner of rare earths minerals lost 4.4% on the day.

Overall, convertibles pricing action seemed mostly back and forth on Wednesday, a New York-based trader said.

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