Morning Commentary: SunEdison weaker; Abengoa seeks creditor protection; Total deal on tap

By Rebecca Melvin

New York, Nov. 25 – SunEdison Inc.’s convertibles complex was quoted lower early Wednesday but not really trading as shares of the solar company fell following a downgrade to “sell” from “neutral” by UBS, a New York-based trader said.

News that Spain’s Abengoa SA renewable energy and engineering firm has started insolvency proceedings also contributed to negative sentiment that affected SunEdison, the trader said.

Abengoa “will continue negotiations with creditors with the goal of reaching an agreement to ensure its financial viability,” according to an Abengoa filing. Under Spanish law, the company has four months to continue to talk with creditors before they are able to force bankruptcy proceedings.

Abengoa shares fell up to 70% on Wednesday. Abengoa has several convertible bond issues, including a 5.125% exchangeable note that priced earlier this year and which matures in 2017.

Meanwhile, SunEdison’s move marks a swift turnaround from Tuesday when its shares spiked and the convertibles strengthened on news of a new solar deal and debt repayment.

SunEdison shares were down as much as 16% early Wednesday but were last down 50 cents, or 12%, at $3.62.

Overall, the U.S. convertibles market was quiet ahead of the Thanksgiving holiday on Thursday when financial markets will be closed. There is also an early close for stock and bond markets on Friday.

But in Europe, Total SA announced that it is raising about $1.2 billion of seven-year convertible bonds in a Regulation S deal that was seen pricing later Wednesday.

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