Morning Commentary: Convertibles trading thin amid Fed meeting; Transocean notes active

By Rebecca Melvin

New York, Sept. 17 – Volumes were very light in the convertibles space early Tuesday as market players seemed to pause as the U.S. Federal Reserve began its regularly scheduled policy makers’ meeting.

The Federal Open Market Committee wraps up its meeting on Wednesday, and although the economic picture has gotten a little murky of late, most market players still expect a 0.25% rate cut to be taken. “The big question is what they will say in terms of the outlook for the direction going forward,” a New York-based trader said.

Transocean Ltd.’s 0.5% convertibles due 2023 pulled back in tandem with a retreat in oil prices that occurred after a Saudi report that production capacity damaged by a drone attack may go back online sooner than expected.

“Transocean was likely a mover on the spike in oil prices,” a market source said. On Tuesday the convertibles peeled back to 92.75 to 93.25 after spiking to 96.25 on Monday afternoon. Meanwhile shares of the oilfield services company pulled back 41 cents, or 6.3%, to $6.10. Shares had jumped 11.5% on Monday.

New Relic Inc., which also has a convertible with a 0.5% coupon and due 2023, traded at 94.9, which was a bit above the recent range of 93 to 94.5. Shares of the San Francisco-based software analytics company traded up $2.98, or 5%, in early trade to $61.20.

Booking Holdings Inc.’s sister convertibles were among the more actively traded convertibles in an extension of Monday’s session trends.

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