Convertibles weaken, outperform high yield; Illumina contracts 0.5 point; Whiting holds in

By Rebecca Melvin

New York, Sept. 24 – Convertibles were under pressure Thursday, trading lower along with lower stocks and weaker credit, but they outperformed some asset classes like high yield, a New York-based trader said.

The convertibles market was weaker by about 0.125 point to 0.25 point across the board, amid outright sellers, but “the real story was the relative outperformance of convertibles,” the trader said.

Weakness was broad-based, with a notable difference being that there were outright sellers in some of the investment-grade issues that had been resilient up to now, a second New York-based trader said.

“It’s weaker with the tape, across the board,” the trader said, regarding early trading.

“There is IG stuff that has come for sale, which makes a bit of a contrast to the last few weeks,” the trader added.

Illumina Inc. was notably weaker. The Illumina 0% convertible due 2019, or the A tranche, was trading actively and was lower by about a point at just under 113. Shares of the Diego-based developer of genetic research tools were down in the early going by $4.41, or 2.3%, at $185.51. That was on top of a 1.6% dip on Wednesday.

Priceline Group Inc. and Tesla Motors Inc. were also trading fairly actively and were seen down about 0.125 point a piece, but Whiting Petroleum Corp.’s convertibles were unchanged on Thursday, which was surprising given that the company’s straight bonds were lower.

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