Morning Commentary: Homebuilders in focus after strong D.R. Horton earnings; Brookdale quiet

By Rebecca Melvin

New York, Jan. 26 – Convertibles got off to a slow start on Monday as traders watched mixed earnings news and kept tabs on a developing eastern U.S. snowstorm that could potentially snarl transportation in major metro areas, including New York and Boston.

Homebuilders were in focus after D.R. Horton Inc., the largest U.S. homebuilder, reported earnings that beat estimates as sales jumped.

The Fort Worth, Texas-based homebuilder said its weekly sales pace accelerated in January and that it is well-positioned to capture demand in the spring selling season.

D.R. Horton’s 0% convertibles due 2021 were not heard in trade but shares were up $1.54, or 7%, to $24.64.

Shares of other homebuilders like Ryland Group Inc., Lennar Corp. and Toll Brothers Inc. were also in positive territory, but no levels were heard on the underlying convertibles.

“It’s been a slow start,” a New York-based sellsider said.

Moving the opposite direction, shares of Brookdale Senior Living Inc. were sharply lower after the Brentwood, Tenn.-based operator of assisted-living homes for seniors warned that lower-than-expected demand and increased insurance-reserve adjustments hurt the latest quarter.

The Brookdale 2.75% convertibles due 2018 were last seen at 136 but hadn’t traded Monday, two sources said.

Brookdale shares were down $3.65, or 10%, at $33.05.

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