Convertibles mostly quiet; Cameron, Nabors edge higher as oil rises; US Airways, AMR firm

By Rebecca Melvin

New York, Oct. 12 - The convertible bond market was mostly quiet on Monday with bond markets closed in observance of Columbus Day. But movements in the thinly traded stock markets sparked some trades in the convert space, sources said.

A pair of oil-related convertible names traded at slightly higher levels along with a jump of nearly 2% in oil prices. Energy prices were buoyed by optimism about the pace of global economic recovery and the fact that fuel demand was up with colder weather in the United States.

Oil services company Cameron International Corp. saw its convertibles add along with their underlying shares, despite a stock downgrade to "neutral" from "overweight" from HSBC Securities. And land-drilling contractor Nabors Industries Ltd. was in trade at 97.5.

A few airline names were in trade including US Airways Group Inc. and AMR Corp. Those names were steady to slightly weaker against stronger shares.

The airline sector was strong despite higher oil prices and has been helped recently by refinancings that have expanded valuations, a New York-based sellside analyst said.

Avis Budget Group Inc.'s 3.5% convertibles, which priced last week, traded at 102.25 versus a share price of $12.125, compared with Friday's 101.5 versus a share price of $12.00.

Both issues of Advanced Micro Devices Inc. were up about 0.5 point on the back of an equity upgrade.

But Onyx Pharmaceuticals Inc. - a name in which convertibles players are not overly involved - wasn't heard in trade despite news that the company purchased a privately held biopharmaceutical company and its stock jumped 5%.

Intel Corp. was also quiet head of expected earnings news from the chip giant.

Stocks started off the day strong, with the Dow Jones Industrial Average hitting a 2009 high during the session. But the index sold off later in the day amid a breakdown in technical support and ended the day only slightly above the flat line.

Meanwhile, crude oil rose to a seven-week high, up $1.50, or 2.1%, to $73.27 a barrel on the New York Mercantile Exchange at mid-afternoon Monday.

Cameron, Nabors edge up

Cameron International 2.5% convertibles due 2026 traded at 134 versus a share price of $40.50, a New York-based sellside desk analyst said.

Shares of the Houston-based oil services company ended up 65 cents, or 1.7%, at $40.16, down from intraday strength but still up on the day in light trade.

Cameron isn't a name that's been in trade much recently, but "it's a large issue that people come back to," the analyst said.

Nabors' 0.94% convertibles due 2011 traded at 97.5, which was up from about 97. Shares of the Bermuda-based land drilling company added 52 cents, or 2.5%, to $21.86.

Higher oil and stock prices likely were behind the action in the convertibles market, the analyst said.

US Airways, AMR steady

US Airways' 7.25% convertibles due 2014 traded at 121 versus a share price of $4.50. Shares of the Tempe, Ariz.-based airline ended a penny above that level, which was up by almost a percentage point on the day.

The US Airways paper was previously seen at 119 versus a share price of $4.50.

AMR's 6.25% convertibles due 2014 traded Monday at 102.375 versus a share price of $7.55. Shares of the Fort Worth-based airline ended a bit up from that level, or at $7.66, which was up 9 cents, or 1.2%.

AMD adds

AMD's 5.75% convertibles due 2012 were better by about 0.5 point standing at 85, while the AMD 6% paper due 2015 was also up by about 0.5 point at 74.

Shares of the Sunnyvale, Calif.-based chip maker gained 26 cents, or 4.4%, to $6.14 on Monday, helped higher by a UBS upgrade.

UBS analyst Uche Orji raised the company's shares to "buy" from "neutral," citing improvement in personal computer demand. He raised his price target to $7.50 from $4.50.

In addition to signs that consumer demand for PCs is improving, Orji said he believes the Abu Dhabi-based Advanced Technology Investment Co. is committed to its role in AMD's GlobalFoundries Inc. spinoff.

Onyx remains quiet

Onyx's 4% convertible notes due 2016, which initially priced in August, were bid at 104 on Monday and weren't seen in trade. Shares of the Emeryville, Calif.-based biopharmaceutical company gained $1.36, or 5%, to $28.26.

"People don't seem to be involved in that name," a sellsider said about investors in Onyx.

The company that focuses on cancer treatments agreed to buy Proteolix Inc. for $276 million cash plus potential milestone payments.

Proteolix is focused on discovering and developing novel therapies that target the proteasome for the treatment of hematological malignancies and solid tumors. Proteolix's lead compound, carfilzomib, is a proteasome inhibitor currently in multiple clinical trials, including an advanced phase 2b clinical trial for patients with relapsed and refractory multiple myeloma.

Mentioned in this article:

Advanced Micro Devices Inc. NYSE: AMD

AMR Corp. NYSE: AMR

Avis Budget Group Inc. NYSE: CAR

Cameron International Corp. NYSE: CAM

Intel Corp. Nasdaq: INTC

Nabors Industries Ltd. NYSE: NBR

Onyx Pharmaceuticals Inc. Nasdaq: ONXX

US Airways Group Inc. NYSE: LCC

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