Convertibles weaken amid market turmoil over Greece; Tesla lower; Peabody Energy quiet

By Rebecca Melvin

New York, June 29 – U.S. convertibles were weaker on Monday as risk-off sentiment in the broader markets over the Greek debt situation eclipsed other market factors. But liquidity was very thin, so it was difficult to determine how weak things actually got, market sources said.

Earlier in the session, market traders estimated that convertible paper was lower by about 0.25 point to 0.5 point, in general.

“It’s lower,” a New York-based trader agreed. “But there is not the volume, there’s just no liquidity, so it’s hard to tell how much lower.”

The S&P 500 stock market closed steeply lower, ending the session near its lows, down 43.85 points, or 2%, to 2,057.64. The Dow Jones industrial average closed down 350.33 points, or nearly 2%, at 17,596.35, and the Nasdaq stock index lost 122.04 points, or 2.4%, at 4,958.47.

Tesla Motors Inc.’s convertibles were weaker on Monday amid general market pressure and after the company’s unmanned SpaceX rocket, carrying supplies to the International Space Station, exploded shortly after liftoff on Sunday.

Peabody Energy Corp. was quiet after its convertibles dropped sharply on Friday on word of a rating downgrade. Moody’s Investors Service downgraded the company to Ba2 from Ba1, citing high leverage for the St. Louis-based coal company amid an ongoing price decline in metallurgical coal and a drop in oil prices.

The Peabody 4.75% convertibles due 2066 traded last at 15 on Friday, which was down from 18 to 20 on Thursday.

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