Morning Commentary: Transocean convertible bounces around in trade; Radius Health gains

By Rebecca Melvin

New York, Aug. 23 – There was follow-on trading in Transocean Ltd.’s 0.5% convertibles due 2023 after a big block traded on Thursday, but many other names went silent heading into one of the last summer weekends of the season.

The Transocean notes were bouncing around in the 80 to 82 range for the past several sessions, and they weren’t any weaker in the early going despite a drop in oil prices. The notes last traded at 81.195, which was about even compared to Thursday’s close and still higher than their level around mid-August, which sported a 79 handle.

Shares of the Zug, Switzerland-based oilfield services company were down 15.5 cents, or 3.41%, at $4.385 early Friday amid a broader drop in the equity markets.

The Transocean note has a premium of about 85%, which means that it is still equity sensitive But it is unsecured, so it trades wider than much of the company’s other paper, and it seems to be trading cheaper than some other 2023 paper such as the 9% notes of 2023, a market source told Prospect News.

The broader markets were ruminating on trade and rate concerns again, and the major stock indices were down sharply after China said it will impose tariffs on $75 billion more of U.S. goods. China also said it will resume tariffs of 25% on U.S. vehicles and 5% on U.S. auto parts starting in December. The back and forth trade actions include the United States’ tariffs imposed on $300 million of Chinese goods.

Oil prices fell amid fears that the tariffs will contribute to the slowing global economy. Meanwhile, bonds were higher and the debate on rates continued. Federal Reserve chairman Jerome Powell said on Friday that the Fed is prepared to provide more stimulus if global economic slowing begins to pinch in the United States. The comment came in prepared remarks at the central bank’s annual Jackson Hole, Wyo., retreat.

Radius Health Inc. was an interesting name that was seen in trade this past week. The sub-par issue added a little as did the shares of the Waltham, Mass.-based biopharmaceutical company.

Radius Health 3% convertible due 2024 traded at 89.5 last on Thursday. Since then shares were off slightly, down 19 cents, or 0.8%, at $23.68.

© 2015 Prospect News.
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