Morning Commentary: Convertible market activity wanes; Herbalife little moved on news; Vipshop dips

By Stephanie N. Rotondo

Seattle, Aug. 21 – After about two weeks of an active primary calendar, the convertible bond market was taking a breather on Monday.

“It’s the penultimate week of summer,” a trader said. “There is nothing going on at all.”

He noted that Herbalife Ltd.’s stock (NYSE: HLF) was “up almost 10%, but no bonds have printed.”

The 2% convertible notes due 2019 last traded with a 98 handle last week. However, with the equity getting boosted by news on Monday, there was some expectation that the convertibles might also move.

Herbalife said on Monday that it had been in talks to take the company private. While those talks failed to bring about such a deal, the company is planning a modified Dutch tender offer to buy back up to $600 million in stock between $60.00 and $68.00 a share.

Meanwhile, a trader said Vipshop Holdings Ltd.’s 1.5% convertible notes due 2019 were down “a whole half point” in early dealings.

His somewhat sarcastic review came as the company’s stock (NYSE: VIPS) fell further into the single-digits.

Another market source saw the issue in a 98.75 to 99 context, which was deemed about unchanged.

The equity began to trade off last week, when the Chinese online retailer reported earnings that once again showed a decline in growth. After the results were released on Thursday, the stock dropped about 13% between then and Friday.

Come Monday, the shares were down almost 5%.

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