New Alcoa mandatories slip below par; new TiVo convertibles trade up; secondary drags

By Rebecca Melvin

New York, Sept. 17 – Alcoa Inc.’s newly priced 5.375% mandatory convertible preferreds slipped below par on their debut in the secondary market Wednesday after the New York-based aluminum producer priced $1.25 billion of the three-year securities toward the cheap end of talk, according to market sources.

Intraday the Alcoa mandatories perked up some, but they ended lower at 49.75 bid, 50 offered despite shares closing up 0.7% at $16.28.

“I’m surprised how poorly Alcoa traded; I thought it modeled OK, and then it came at the cheaper end of terms,” a New York-based trader said.

Also in the primary market, TiVo Inc.’s newly priced 2% convertibles traded up after the Alviso, Calif.-based digital video recorder company priced $200 million of the seven-year senior notes at the midpoint and cheap end of talk.

The new TiVo convertibles changed hands at 101.6 toward the end of the session, according to Trace data; while shares slipped 23 cents, or 1.7%, to $13.48.

Back in secondary action, traders were watching United States Steel Corp.’s stock, which jumped 10% on the company’s positive outlook release.

The U.S. Steel bonds were trading at 5.125 points over parity versus an underlying share price of $46.00, using a delta of 86%, a New York-based trader said. “It looks very attractive,” he said.

Overall though, the tone of the market was weaker again, as has been the case for the last several sessions.

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