Morning Commentary: Weakness in energy, hard-to-borrow names continues in convertibles market

By Rebecca Melvin

New York, Jan. 21 – Despite higher equities and crude oil prices, convertibles trading early Thursday remained consistent with how the space has been acting all week, a New York-based trader said.

Energy and some of the hard-to-borrow names have borne the brunt of the broader market 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. 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 and higher by 42 cents, or 8%.

The convertibles of Tesla Motors Inc., for which it is harder to borrow the common stock, has been weaker as well.

But Twitter Inc. was a little better in the early going with the Twitter A tranche quoted up about 0.25 point at 85.25 and the Twitter B tranche up about 0.25 point at 81.25, the trader said.

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