Convertibles trade quietly amid mixed stocks; Medicines lower with shares; Intel eyed

By Rebecca Melvin

New York, July 19 – The convertible bond market was trading quietly on Tuesday amid mostly trendless stock markets, which ended mixed, although the Dow Jones industrial average closed at another record high, its eighth straight record close.

The Dow index sold off after the Brexit vote late last month but subsequently rebounded and is now 3% higher than it was before the Brexit vote.

Convertible debt mostly followed stock moves on Tuesday, market sources said.

There were no U.S. deal launches on Tuesday. Internationally there were a couple of small deals, including a $25 million add-on to Technology Enhanced Oil plc’s 6% six-year mandatory convertible bonds and Bellatrix Exploration Ltd.’s C$50 million of extendible-maturity convertible debentures sold on a bought-deal basis at par to yield 6.75% with an initial conversion premium of 35%.

Back in U.S. secondary market action, traders said there were various names in trade but on light volumes.

“There were a lot of different trades across the board but nothing of note,” a New York-based trader said.

Medicines Co.’s 2.5% convertibles due 2022 traded down a bit in line with shares to 121.25 from 122 to 123 on Monday. Shares of the Parsippany, N.J.-based health care company were down 51 cents, or 1.45%, to $34.59.

The new Medicines 2.75% convertibles due 2023, of which $402 million priced in June, didn’t appear to have traded. That paper traded on Monday at 99 with the shares a little higher, the trader said.

Yahoo! Inc.’s 0% convertibles due 2018 traded on Tuesday and stood at about 99.25 at the close, a New York-based trader said, against shares of the Sunnyvale, Calif.-based internet search, content and communications company that rose 22 cents, or 0.6%, to $38.17.

Yahoo! reported earnings on Monday that missed estimates by a penny but beat on revenue. The real issue on traders’ minds however was the potential sale of the core business. President and chief executive Marissa Mayer addressed the sale process underway during the earnings call but only said that the company was deep into proposals. There is speculation that the deal will be completed by the end of July. CNBC reported that there are five bidders left in the auction.

Earnings season is ramping up, and Pandora Media Inc.’s 1.75% convertibles due 2020 traded off nearly a point to 102 at the close. Shares of the Oakland, Calif.-based internet radio service slipped again also, down another 31 cents, or 2.4%, to $12.50 after dropping 1.3% on Monday. The social media company is expected to report quarterly earnings on Thursday.

Wednesday’s earnings lineup includes Intel Corp. and Iconix Brand Group Inc., which may generate some interesting market action, the trader said.

Citrix Systems Inc. is reporting July 26, not on Wednesday as reported earlier in Prospect News’ early commentary.

“Intel is reporting after the market close. And that is a pretty important bellwether for the rest of the semi space, so that one will be closely watched,” a New York-based trader said.

Iconix will also be closely watched. “That is an interesting one. They have missed earnings estimates lately, but they had a good last quarter,” a second trader said.

A third trader said that the Iconix convertibles will improve if the earnings are positive.

Equities ended mixed with the Dow Jones industrial average closing at another record high, or up 25.68 points, or 0.1%, to 18,558.73 representing its eighth straight record high, while the S&P 500 stock index closed down 3.11 points, or 0.1%, to 2,163.78, and the Nasdaq Composite index closed down 19.41 points, or 0.4%, to 5,036.37.

Mentioned in this article:

Bellatrix Exploration Ltd. Toronto: BXE

Citrix Systems Inc. Nasdaq: CTRX

Iconix Brand Group Inc. Nasdaq: ICON

Intel Corp. Nasdaq: INTC

Medicines Co. Nasdaq: MDCO

Pandora Media Inc. NYSE: P

Yahoo! Inc. Nasdaq: YHOO

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.