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Morning Commentary: Weatherford, Becton Dickinson drop in New Year
By Abigail W. Adams
Portland, Me., Jan. 2 – Weatherford International Ltd.’s 5.875% convertible notes due 2021 dropped alongside the company’s equity after the oil and natural gas company announced it was scrapping its joint venture with Schlumberger NV in favor of divestment.
After ending the year in the 107 to 108 range, the 5.875% convertible notes dropped 5 points to trade in the 102 range early in Tuesday’s session. Weatherford’s stock, one of the most active in early trades Tuesday, was down 15.95% at $3.51.
Weatherford late on Friday announced that it had scrapped plans for a joint venture with Schlumberger for its North American pressure pumping and well completion operations, opting instead to divest the business to Schlumberger for $430 million in cash.
Proceeds will be used to deleverage Weatherford’s $7.9 billion in debt, the company said.
Becton, Dickinson & Co.’s series A mandatory convertible preferred stock due 2020, one of the top performers of 2017, is expected to lose some ground in 2018. The convertible preferred stock due 2020 was in the 59 range in late December.
The convertible preferred stock was at 58.13 bid, 58.25 offer early in Tuesday’s session, a market source said.
“At these prices, they’re going to start to get picked away at regardless of what rates they got,” a market source said.
S&P lowered its rating of the company’s mandatory convertible preferred stock on Dec. 29 to BB+ from BBB- due to the debt Becton Dickinson assumed from the purchase of C.R. Bard.
Proceeds from the $2.7 billion issuance of mandatory convertible preferred stock due 2020 were used to help fund the acquisition of the Murray Hill, New Jersey-based medical technologies company, which Becton Dickinson completed on Dec. 29.
Becton Dickinson’s stock was trading at $218.16 early in Tuesday’s session, an increase of 1.9%.
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