Convertibles follow stocks; solar names pressured; GT Advanced adds; Citrix lower, in line

By Rebecca Melvin

New York, April 28 - Convertibles mostly followed stocks on Monday, which moved erratically through the session, selling off in the early going after looking higher pre-open and then rallying into the close.

"It's kind of strange; we've had a couple of these types of days," a New York-based trader said, referring to sessions in which tech names sell off and then turn around.

Convertibles ended to move around in line, or flat, on a hedged basis.

Among convertibles in focus were names in the Chinese solar space, including Canadian Solar Inc.'s 4.25% convertibles due 2019, which priced in February, JinkoSolar Holding Co. Ltd.'s 4% convertibles due 2019, which priced in January, and GT Advanced Technologies Inc.'s 3% convertibles due 2020, which priced in December.

Of these names, GT Advanced expanded 0.25 point to 0.5 point on a dollar-neutral, or hedged, basis, a trader said.

Credit Suisse put out a negative note on the Chinese solar space, but the trader thought the downward move in solar stocks was more a function of the general sell-off in the technology sector.

Elsewhere, Citrix Systems Inc. was lower, but in line with the underlying shares, at 99.75 bid, 100.25 offered for the new 0.5% convertibles versus a share price of $58.75. The convertibles had a positive debut on Friday.

The level was in line with the underlying shares of the Fort Lauderdale, Fla.-based cloud computing solutions company, which shed about 1%.

On Friday, the Citrix 0.5% bonds went out at 100.375 bid, 100.635 offered with the shares at $59.42.

Tesla Motors Inc. was another convertible name that traded lower, in line with the underlying shares.

Elsewhere, Goldcorp Inc. was active as investors looked for a safe place to park cash, with its 2% convertibles, which mature in a couple of months, steady at just over 100.

Earnings are continuing to drive some trade, one trader said when asked what was influencing the market.

Otherwise there was a Monday feel to the market, traders said. The convertibles market is typically quiet on Mondays and often on Fridays, which are called "book end" days.

But there is a lot of economic data expected out this week, which may have kept some investors on the sidelines, while month end is coming up midweek, which tends to encourage trimming or adding to positions.

A reading on gross domestic product for the first quarter is due out on Wednesday, and the Labor Department's April jobs report is set to be released Friday.

In economic data on Monday, pending home sales rose in March for the first time in nine months. The National Association of Realtors said its pending home sales index rose to 97.4, up 3.4%. The increase beat economists' expectations for a 1% rise.

GT Advanced in focus

GT Advanced's convertibles expanded on hedge. The GT Advanced 3% convertibles due 2017 were quoted at the end of the session at 213 bid, 213.75 offered versus the closing underlying share price of $15.59.

GT Advanced's 3% convertibles due 2020, which are the newer issue, ended the session at 151.5 bid, 152.5 offered.

The older GT Advanced convertibles trade on a 90% delta and the newer ones on about an 85% delta, a New York-based trader said.

Both of the bonds were higher on a dollar-neutral, or hedged, basis, by about 0.25 point to 0.5 point.

"The stock was down quite a bit," the trader said, but then came back a lot. They ended lower by 50 cents, or 3%, at $15.59.

There was no immediate news behind the move in the stock of the Merrimack, N.H.-based solar and LED industries technology company.

Canadian Solar's convertibles were down and were quoted at 96 bid, 97 offered at the end of the session with shares of the Markham, Ont.-based solar power component company sharply lower, having skid $3.32, or 11%, to $26.83.

The share drop seemed to be precipitated mostly by the general tech sell-off, a trader said. But there was also a negative note on the Chinese solar energy names published by Credit Suisse on Monday.

Canadian Solar is based in Canada with most of its manufacturing facilities in China.

Credit Suisse was negative on the China solar industry after interviews that indicated the Chinese government may find it challenging to meet its target of increasing its solar energy installations by 14 gigawatts in 2014.

The Credit Suisse note suggested that the increase its China's solar energy output is more likely to be by about 11.5 gigawatts, down from the firm's previous estimate of a 12 gigawatt increase.

The Credit Suisse note contended that demand for solar energy is likely to rebound in the second half of 2014, but policy changes must occur for this to happen. Nevertheless, the Credit Suisse analyst noted that Canadian Solar and JinkSolar are likely to be among the Chinese solar energy companies with access to project capital and permits, and thereby less affected by the lower increase in solar than companies that face challenges funding installation projects.

Mentioned in this article:

Canadian Solar Inc. Nasdaq: CSIQ

Citrix Systems Inc. Nasdaq: CTXS

Goldcorp Inc. Toronto: G

GT Advanced Technologies Inc. Nasdaq: GTAT

JinkoSolar Holding Co. Ltd. NYSE: JKS

Tesla Motors Inc. Nasdaq: TSLA

© 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.