Convertibles quiet ahead of Fed news; SunPower lower on swap; Restoration Hardware mixed

By Rebecca Melvin

New York, Dec. 15 – U.S. convertibles traded quietly on Tuesday with only a few company-specific trades in notable action and without the large moves that hit some high-yield names in the past couple of sessions, a New York-based trader said.

“There was nothing that significant,” he said, referring to sharp losses seen in names like Cemex SAB de CV and Navistar International Corp. on Monday and Friday.

“It’s a pretty quiet day as far as the headlines go,” the trader said.

Given that year-end is around the corner and news on rates is expected Wednesday at the conclusion of the Federal Open Market Committee’s policy meeting, “it’s a formula for a quiet day,” he said.

SunPower Corp.’s 4% convertibles, which priced earlier this month, were active and traded up on an outright basis along with higher shares, but lower on a dollar-neutral, or swap, basis after news that the international climate change deal was signed in Paris.

Earlier this month the San Jose, Calif.-based solar company priced an upsized $400 million of the seven-year senior debentures at the cheap end of talked terms.

SolarCity Corp.’s convertibles were also trading a little better on an outright basis after the climate change deal, which promises to encourage the use of renewable energy sources, and also after news that the San Mateo, Calif.-based solar company has amended its credit facility, increasing its size and extending its maturity.

SolarCity’s 1.625% convertibles due 2019 traded slightly higher 75.125. The underlying shares pared early gains for a 3.7% lower close to $40.05.

Restoration Hardware Holdings Inc.’s two 0% convertibles, one due 2019 and the newer one due 2020, traded mixed after the Corte Madera, Calif.-based specialty retailer reported earnings that beat estimates and raised guidance. Shares wavered but were last up nearly 1%.

Restoration’s 2019 convertibles crossed the Trace tape at late morning at 91.562, which was up 1.4 points on an outright basis. The Restoration 2020 bonds traded at 87.9, which was down about 0.7 point, according to Trace.

“The rate decision tomorrow” was cited as a reason behind quieter trade as was the fact that year-end is looming and “no one is looking to do anything either way,” a trader said.

The Federal Reserve is expected to begin to raise interest rates on Wednesday for the first time in nine years, deeming the economy and job market strong enough to withstand higher interest cost. The Fed met on Tuesday and is expected to release a summary of economic projections at a news conference from central bank president Janet Yellen on Wednesday.

Mentioned in this article:

Restoration Hardware Inc. NYSE: RH

SolarCity Corp. NYSE: SCTY

SunPower Corp. Nasdaq: SPWR

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.