Convertibles mixed to weaker; Yahoo! lower outright, on hedge; Molina mixed; Herbalife up

By Rebecca Melvin

New York, Sept. 9 – A few issues trading actively in the convertibles market were weighed down with lower shares on Tuesday.

Yahoo! Inc.’s 0% convertibles moved lower on both an outright and dollar-neutral, or hedged, basis in active trade as shares slid amid headlines regarding the initial public offering of Alibaba Group, of which Yahoo currently owns a 22.5% stake.

Overall, the convertibles market was about 0.25 point lower, on average, a New York-based trader said.

But some active names were mixed, including Molina Healthcare Inc., which saw its new 1.625% convertibles add about 0.375 point on a dollar-neutral, or hedged, basis, but its 1.125 convertibles due 2020 slip by about 0.25 point, according to a New York-based trader, who said the names in his space were mixed overall.

Herbalife Ltd.’s 2% convertible notes due 2019 expanded on a dollar-neutral basis, however, as shares of the dietary supplement company fell.

Meanwhile, the primary market was quiet for the second straight session, which was surprising after last week’s burst of activity.

“Last week there were more than expected, and this week less than expected,” a New York-based sellsider said.

It wasn’t clear why the primary was quiet after four deals priced in the holiday-shortened week following Labor Day.

Equities were mostly lower with selling that accelerated into the close. Treasuries also eased, but the U.S. dollar was up.

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