Convertibles ‘for sale’ amid weaker equities, oil prices; SunEdison complex droops

By Rebecca Melvin

New York, Aug. 19 – Weaker equity markets and a slide in oil prices weighed on convertibles on Wednesday, with a wave of selling that boosted trading volume that has been otherwise sluggish for much of August.

“Things are pretty weak,” a New York-based trader said during Wednesday’s session. “There’s a pretty weak equity tape, but you would think that things would be a little bit better with rates. But we are lagging the rate move, for sure.”

Five-year U.S. Treasuries were 8 basis points tighter at the end of Wednesday, representing a 5% drop in the yield to 1.4966%.

A second New York-based sellsider said convertibles were “for sale across the board.” He noted that the weakness represented the continuation of a trend that has been in place in August and for much of the summer.

The reason for the bump up of activity on Wednesday was not immediately known. “I think there is an expectation that things will be fairly quiet the rest of the summer,” a trader said. A clean up may have been underway ahead of the expected slowdown, he said.

SunEdison Inc.’s convertibles, which had a positive day on Tuesday on the debut of the $650 million of 6.75% perpetual convertible preferreds, were lower on Wednesday.

“SUNE has imploded. The stock is down 6%,” a trader said at late morning. The stock actually closed down 7%.

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