Thornburg, Alesco, Anthracite up with dividend declarations; Pier 1 rises before earnings report

By Evan Weinberger

New York, Dec. 18 - Thornburg Mortgage Inc., Alesco Financial Inc. and Anthracite Capital, Inc. all saw their convertibles rise Tuesday as they set their quarterly dividends.

Pier 1 Imports Inc. convertibles were up in the run-up to its earnings report, which is scheduled for Thursday.

And AMR Corp. convertibles were lowered by rising oil prices, as well as a rising payroll.

Overall, however, the convertibles universe was relatively quiet Tuesday.

"It just seemed kind of soft out there," one trader said, adding that the coming holiday took the attention of some market players. "I think it was just lack of focus."

An analyst said that he saw people just riding out the last days of a volatile year. "I think a lot of people are just going to sit on their hands until Jan. 1 or Jan. 2 and go from there," he said.

Equity markets took a jagged route to an up close, as fears of a recession wrestled with better-than-expected earnings from Goldman Sachs and electronics retailer Best Buy Cos. Inc. Those third-quarter earnings statements came with warnings of future problems, however.

The European Central Bank's lending of $500 billion to European banks provided some good news, while the announcement that new home starts in the United States reached a 16-year low provided some bad news. The seesaw continues.

The Dow Jones Industrial Average closed the day 65.27 points, or 0.50%, higher at 13,232.47.

The Nasdaq gained 21.57 points, or 0.84%, to close at 2,596.03.

The Standard & Poor's 500 closed Tuesday at 1,454.98, a gain of 9.08 points, or 0.63%.

Toward the end of the day, another analyst said he had heard rumors of new deals coming but doubted there would be any if they didn't come by Thursday morning.

But one company denied the doubters and came to market. ADC Telecommunications Inc. launched $400 million in convertible subordinated notes in two tranches Tuesday before the market close.

The first tranche, due July 15, 2015, is talked at a 3.25% to 3.75% coupon and a 70% to 75% initial conversion premium. There are embedded warrants on 70% to 75% of the underlying shares of the first tranche.

The second tranche, due July 15, 2017, is talked at a 3.25% to 3.75% coupon and an 80% to 85% initial conversion premium. There are embedded warrants on 80% to 85% of the underlying shares of the second tranche.

Each tranche of the Securities and Exchange Commission registered transaction comes with a $25 million greenshoe.

The convertibles are set to price Wednesday after the market close.

ADC is a Minneapolis-based telecommunications firm. The company plans to use the proceeds to repurchase outstanding convertibles and for general corporate purposes and strategic opportunities.

Good day for Thornburg

Santa Fe, N.M.-based mortgage lender Thornburg had a good day Tuesday.

Larry Goldstone will add chief executive to his president and chairman duties. And the company reinstated its quarterly dividend of 25 cents for the fourth quarter. Following a $1.1 billion third-quarter loss, Thornburg had canceled its dividend.

"I guess they're able to earn some spread again," an analyst said.

Thornburg's 7.5% convertible redeemable perpetual preferred stock closed Tuesday at $17.05 versus a closing stock price of $10.18. They closed Monday at $15.70 versus a stock price of $9.61.

Thornburg stock (NYSE: TMA) gained 57 cents, or 5.93%, on the day.

Other mortgage brokers also up

Anthracite and Alesco also both announced quarterly dividends Tuesday, and those announcements contributed to a good day all around for mortgage-related convertibles.

"That sector is up pretty solidly today," the analyst said.

New York-based Anthracite saw its 11.75% convertible senior notes due Sept. 1, 2027 close Tuesday at 90.1275 versus a closing stock price of $7.84. They closed Monday at 88.60 versus a stock price of $7.50.

Anthracite stock (NYSE: AHR) gained 34 cents, or 4.53%, on Tuesday.

Philadelphia-based Alesco's 7.625% convertible senior notes due May 15, 2027 closed Tuesday at 71.3315 versus a closing stock price of $3.99. They closed Monday at 70.3635 versus a stock price of $3.83.

Alesco stock (NYSE: AFN) picked up 16 cents, or 4.18%, on the day.

Pier 1 up before earnings

Fort Worth, Texas-based specialty furniture retailer Pier 1 is scheduled to release its third-quarter earnings Thursday. The buzz must be good, because its stock and convertibles were up Tuesday.

Not everyone is convinced, however.

"I'd be a little suspicious about it," one analyst said.

Pier 1's 6.375% convertible senior notes due Feb. 15, 2036 closed Tuesday at 79.4886 versus a closing stock price of $3.72. They closed Monday at 77.3409 versus a stock price of $3.28.

Pier 1 stock (NYSE: PIR) leaped 44 cents, or 13.41%, on the day.

AMR flies lower

Fort Worth, Texas-based AMR, the parent company of American Airlines, saw its convertibles fly lower Tuesday on rising oil prices and a hiring binge.

AMR's workforce was up 0.7% in the third quarter, the company said. And AMR announced that it was recalling or hiring 250 more maintenance workers. AMR currently performs maintenance work for other airlines.

AMR's 4.5% convertible senior notes due Feb. 15, 2024 closed Tuesday at 105.085 versus a closing stock price of $15.68. They closed Monday at 106.745 versus a stock price of $15.97.

AMR's 4.25% convertible senior notes due Sept. 23, 2023 closed Tuesday at 114.41 versus a stock price of $15.68 after finishing Monday at 115.895 versus a stock price of $15.97.

AMR stock (NYSE: AMR) dropped 29 cents, or 1.82%, on Tuesday.

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