Evergreen Solar, LDK Solar active at higher levels; Horizon Lines moving into new hands

By Rebecca Melvin

New York, Oct. 1 - The convertible bond market was fairly quiet on Friday to kick off the fourth quarter, but high-yield paper remained better bid, and there was continued action in a few of those names, which had been trading intermittently throughout the week.

Evergreen Solar Inc. was sideways in Friday's action at the higher levels that the name has seen this week following LDK Solar Co. Ltd.'s positive news out on Monday about its $9 billion commitment for development funds from the Chinese government.

No other solar convertible names were heard in trade Friday.

Horizon Lines Inc. saw its 4.25% convertibles due 2012 in trade at 90. There was no particular news out for the Charlotte, N.C.-based shipping company. But action has been solid in this name, which had been a distressed issue and is now turning over into the hands of yield-to-put players, a New York-based sellside trader said.

"These guys that are selling now, rode them all the way up 20 points," the trader said.

Also active was Crown Castle International Corp.'s 6.25% convertible preferreds, which were actively traded on Friday with the common shares at a 52-week high and sitting right on top of the convertibles' provisional call price.

Overall, action was quiet, with the biggest volume trader, not surprisingly, Transocean Ltd. The Transocean 1.5% B series convertibles traded little changed at 98 as the underlying shares did the same on thin volume.

"There's not been that much this week," a New York-based sellsider said. He added that it has been better though for convertibles given that the "stock market has established itself at better levels."

Evergreen, LDK steady

Evergreen Solar's 4% convertibles due 2013 traded at 40 on Friday, which was little changed for the last two days or sideways, after the paper started pushing up from 36 on Monday.

Shares of the Marlboro, Mass.-based maker of solar power panels ended up a penny, or 1.5%, at $0.745, and they are up from $0.61 on Monday.

"They've been pretty active all week," a New York-based sellside trader said of Evergreen Solar.

The Evergreen Solar convertibles are up seemingly in sympathy with LDK's financing news, but other convertible paper isn't following suit, necessarily, he said.

LDK was also still trading at 97.5 bid, 98 offered, the level to which they jumped on Monday on news the Chinese solar power company has sealed a new $8.9 billion borrowing agreement with the Chinese government's China Development Bank.

LDK's 4.75% convertibles due 2013 traded up to 98 versus a share price of $10.00 on Monday, which compared to 93.93 previously.

Shares of the Xinyu City, China-based solar power company jumped $1.60, or 18%, to $10.45 also in heavy volume on Monday.

LDK makes solar wafers and other photovoltaic products. The deal that it sealed with China Development Bank provides the solar company 60 billion renminbi, or about $8.9 billion, in credit over the next five years, which will be used to fuel LDK's expansion.

The company is looking at opportunities to increase capacity or market share in Asia, Europe and the United States, as well as to lower costs.

"It's yield to put paper," the trader said.

"We're definitely seeing 'lift' in 'yieldier' names. It makes sense given yields being so low in corporates and treasuries," a West Coast-based sellsider said.

"It will be interesting to see how many of these companies report for third quarter. Anyway, it is in this area, down the curve, where there is still decent money to be made. As a result, I think it will be in this area that more investors start to focus," the sellsider said.

Horizon Lines at 91-92

Horizon Lines' 4.25% convertibles due 2012 traded at 91 to 92 on Friday, compared to 90 to 91 previously. Shares of the Charlotte, N.C.-based shipping firm settled lower by 3 cents, or 0.71%, at $4.17.

"Horizon Lines has been chasing offers for a while," a sellsider said, calling the paper at 90 outright.

Horizon had been a pretty distressed name, having traded in the 71-72 context until recently.

Crown Castle sees action

Crown Castle's 6.25% convertible preferred shares due 2012 traded at 62 with the common stock at $44.25.

It was actively traded on Friday with $800,000 of the shares changing hands, making it the most actively traded convertible preferred in the space, a New York-based sellside trader said.

"The stock price is sitting right on top of the provisional call price, so hedge funds are setting it up at the low premium with the prospect that it won't be called," a New York-based sellside trader said.

Shares of the Houston communications tower operator were also at a 52-week high. The shares settled down 4 cents on the day at $44.11.

There were some outright sellers in the name, but other outrights and hedge players were scooping up the paper.

Mentioned in this article:

Crown Castle International Corp. NYSE: CCI

Evergreen Solar Inc. Nasdaq: ESLR

Horizon Lines Inc. NYSE: HRZ

LDK Solar Co. Ltd. NYSE: LDK

Transocean Ltd. NYSE: RIG

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