Holiday means light volume for convertibles; Superior Energy paper slips on acquisition news

By Stephanie N. Rotondo

Portland, Ore., Oct. 10 - Convertible bonds were trading Monday, though "very quietly," a trader said, given that certain markets were closed for Columbus Day.

At midday, a trader noted that less than $200 million of bonds had changed hands.

Superior Energy Services Inc. announced that it planned to purchase rival Complete Production Services Inc. in a $2.6 billion cash-and-stock offer. On the news, Superior Energy's convertibles weakened slightly and the stock got bombed.

Meanwhile, Clearwire Corp.'s convertibles were hanging in, despite worrisome comments made last week by its majority shareholder and partner Sprint Nextel Corp.

The Nasdaq OMX Group Inc.'s tender for its convertibles is expected to be completed early next week. On Monday, the convertibles were trading at the tender price - though a trader noted that levels have been near the tender since the news was announced late last month.

Superior falls on acquisition

A trader said Superior Energy Services' 1.5% exchangeable senior notes due 2026 were "down very slightly with [the common shares] down 15%" after it was announced that the company was purchasing Complete Production Services.

The trader placed the convertibles at 99.375.

Another trader quoted the notes at 99.5 bid, 99.625 offered, with a 4.4% yield to put.

"It's a short piece of paper," he said, noting that the stock had fallen as well.

The stock ended down $3.68, or 13.44%, at $23.73 on Monday.

New Orleans-based Superior will buy the smaller rival for about $2.6 billion in a cash-and-stock deal. The company will pay 0.945 of a share of stock and $7 in cash for each share of Complete Production. In total, that is $32.90 per share, or a 61% premium to Complete's Friday closing price.

The acquisition will help Superior expand its hydraulic fracking business. The deal is expected to generate earnings and cash flow in 2012.

Clearwire holds its ground

Clearwire's 8.25% exchangeable notes due 2040 were trading "within context" of Friday levels, a trader said.

He saw the issue trade at 25.25, with a "24.75 bid on follow, no other side."

He said there was a 24 bid on Friday.

Earlier in the session, a trader said Clearwire's convertibles were trading around 26, versus a stock price of $1.37.

The stock finished at $1.25, a loss of 14 cents, or 10.07% on Monday.

Last week, Clearwire's partner, Sprint Nextel, held an investor meeting in which it said that it would discontinue selling devices compatible with Clearwire's network by the end of 2012. That sent investors running, as the Kirkland, Wash.-based company has already been struggling to keep up with advancing wireless technologies.

Also, Sprint has reportedly been looking for investment partners so that it can buy up the remaining equity of Clearwire that it doesn't already own. Thus far there has been no word on whether or not talks have been successful.

Nasdaq trading at tender

The Nasdaq OMX Group's 2.5% convertibles were trading at 102.5, according to a trader.

The price is equal to a tender price announced Sept. 21.

"They have been trading at the tender price pretty much [since it was announced]," a market source said.

The tender will be completed Oct. 18.

Broad market misses

Elsewhere in the land of convertibles, a trader saw Central European Distribution Corp.'s 3% convertible notes due 2013 trading "down a little bit" at 67.5 bid, 68 offered.

"They haven't traded in a while," he said, adding that the current levels offered a 33% yield.

Meanwhile, Cemex SAB de CV's 3.25% series A convertible notes due 2016 were trading at 45 versus a stock price of $2.95, according to a trader.

"They've been out almost six months and are trading in the 40s already," another trader said. The notes were issued March 9, and the first coupon payment was Sept. 15.

"It's pretty horrible," the trader said.

Mentioned in this article:

Cemex SAB de CV NYSE: CX

Clearwire Corp. Nasdaq: CLWR

Superior Energy Services Inc. NYSE: SPN

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