Cobalt convertible extends gains; Twitter edges lower with shares; broader market weakens

By Rebecca Melvin

New York, Sept. 26 – U.S. convertibles players were watching the broader markets on Monday as equities lost ground and the volatility index jumped.

A name that was extending gains from last week’s action, however, was Cobalt International Energy Inc. Both the Cobalt 2.625% convertibles and the Cobalt 3.125% paper notched gains.

“They have been active,” a New York-based convertibles trader said of the Cobalt 2.625% paper. “They are trading higher again today at 50.375.”

A second trader put the Cobalt 2.625% convertibles up at 51 at the market close.

The Cobalt 2.625% convertibles due 2019 moved up to 51 on Monday after early Monday trades at about 50 and after having traded up to about 45 last week.

Cobalt’s 3.125% convertibles were seen changing hands at 38.5, which was up from about 37 previously.

The Cobalt common shares were positive, too, trading up 2 cents, or 2%, at $1.08 last on the New York Stock Exchange. Cobalt is a Houston-based oil exploration and production company.

Meanwhile, there was also follow-on activity in Twitter Inc.’s two convertible bond issues, but they were lower in tandem with the common shares of the San Francisco-based social media company.

Twitter’s 0.25% convertibles due 2019 traded off about 0.25 point to $95.4 on Monday from about 96 on Friday.

The Twitter 1% convertibles due 2021 was down 0.7 point to 94.75, according to Trace data.

Twitter’s common stock was down 75 cents, or 3.3%, at $23.37.

Twitter’s securities had surged last week on speculation regarding a possible sale of the company.

In the broader markets, the CBOE volatility index was up 2.21 points, or 18%, to 14.50 last. The major stock indices closed down 0.9%, with the S&P 500 stock index down about 19 points to 2,146.49.

With the Federal Reserve’s decision last week to postpone raising interest rates, market players turned their focus to a mix of news and data. The political arena was taking center stage on Monday ahead of the first U.S. presidential debate between Democratic candidate Hilary Clinton and Republican candidate Donald Trump. The event was expected to draw as many as 100 million viewers as the highly anticipated faceoff could shift the momentum of the race.

In addition, the oil markets were in focus ahead of a meeting this week of Organization of the Petroleum Exporting Countries and Russia on the sidelines of a conference set in Algiers. There was some optimism that the producers will begin to chisel out an agreement on production limits.

Algeria’s oil minister, Nourredine Bouterfa, is warning about a potentially significant drop in oil prices if no agreement is reached, saying that oil prices could drop from $45 a barrel currently back into the $30 per barrel range if OPEC fails to reach consensus on production. The 14-nation cartel is also slated to meet in Vienna on Nov. 30 and talks are expected to be ongoing throughout the next two months.

Banking stocks were weaker following Deutsche Bank AG, which has dropped sharply on the heels of the U.S. Department of Justice suggesting that the German bank pay fines of $14 billion to settle mortgage-securities investigations.

But a convertibles trader said the market is “not too worried about Deutsche Bank” as “the news has been baked in for a while.”

Mentioned in this article:

Cobalt International Energy Inc. NYSE: CIE

Twitter Inc. Nasdaq: TWTR

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