Energy, difficult stock-borrow convertibles remain weak despite broader market lift

By Rebecca Melvin

New York, Jan. 21 – Energy and some of the harder-to-borrow convertible names remained weak on Thursday despite a bounce back in crude oil prices and mostly higher equities, including gains for some of the severely beaten-down energy companies.

The current trends remained intact, a New York-based trader said of the convertibles market. Energy and some of the convertibles that have underlying stock that is difficult to borrow have borne the brunt of the downdraft while the rest of the convertible market has been fairly stable, the trader said.

Whiting Petroleum Corp. is one of the names that has been trading consistently weaker in recent weeks. The Whiting 1.25% convertibles due 2020 were trading around 45 bid, 46 offered in the early going Thursday, compared to the underlying common shares, which were at $5.44.

The Whiting bonds had been above 70 not too long ago, and the stock, which was up 18% on Thursday, has fallen 38% since Dec. 31.

Also on Thursday, the convertibles of Tesla Motors Inc., which is one of the harder-to-borrow names, was quoted lower. But Twitter Inc. was a little better following more speculation that the San Francisco-based social media company is a takeover target.

“The rumor with Twitter is gaining more traction, and those [bonds] were a little better to buy today,” a trader said.

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