Convertibles weighed down as energy retraces some gains; SunEdison up; CSG Systems on tap

By Rebecca Melvin

New York, March 8 – U.S. convertibles were generally heavier on Tuesday as energy names retraced some of their recent gains. The moves mirrored the broader markets’ drop in oil prices and lower equities, a New York-based trader said.

Both the S&P 500 and Nasdaq stock markets were down more than 1% each, while the Dow Jones industrial average ended down 0.6%.

The convertibles market followed the broader trends. Chesapeake Energy Corp.’s 2.5% convertibles due 2037 retraced about 3 points of recent gains as shares dropped back 18%, following a string of double-digit gains.

Whiting Petroleum Corp.’s 1.25% convertibles also slipped a few points, and shares of the Denver-based energy exploration and production company were down 15%.

Meanwhile, SunEdison Inc. was a focus of convertibles players’ attention in the early going after news that Vivint Solar Inc. pulled out of a deal to be bought by the Maryland Heights, Mo.-based solar technology company. SunEdison shares popped dramatically on news that the controversial deal was scrapped but ended up only 5%.

The SunEdison convertibles were up about a point on average, with the bonds that priced in the middle of last year trading in the mid-teens, a New York-based trader said.

After the market close, CSG Systems International Inc. dipped its toe into the recently lifeless convertibles primary market and launched a $200 million offering of 20-year convertibles that was seen pricing after the market close on Wednesday.

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