Morning Commentary: Dycom gains in active trade after strong earnings, guidance; TimkenSteel prices

By Rebecca Melvin

New York, May 25 – Dycom Industries Inc.’s 0.75% convertibles due 2021 were active early Wednesday. Those bonds jumped more than 6 points on an outright basis and were up about 0.75 point on dollar-neutral, or hedged, basis after the Palm Beach Gardens, Fla.-based specialty contracting company reported better-than-expected quarterly results and guided higher for current quarter earnings.

The Dycom 0.75% convertibles due 2021 traded up to 109.6 in the early going from 103.2 previously, according to Trace data. Dycom shares rose $8.48, or 11.6%, to $80.70.

The bond was positive on a swap basis by 0.75 point, a New York-based trader said.

TimkenSteel Corp. priced $75 million of five-year convertible bullets ahead of the market open at the cheap end of talked terms, for a 6% coupon and 20% initial conversion premium. But the new bonds were not heard in trade as shares slid 13% in the early going.

“We’re not trading them. It’s too small of a deal for us,” a New York-based trader said.

TimkenSteel shares slid $1.33, or 13%, to $9.15 in early trade.

The Canton, Ohio-based steel products maker launched the registered deal, which has a greenshoe for $11.25 million, after the market close on Tuesday.

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