Slumping oil sends energy names lower; Cobalt, Goodrich down again; LinkedIn to price

By Rebecca Melvin

New York, Nov. 4 – Convertibles of energy companies were in the crosshairs and fell in response to a tumble in oil prices on Tuesday after Saudi Arabia cut its prices for crude sold in the United States.

West Texas Intermediate crude settled down 2% at $77.20 a barrel in New York, after sinking to an intraday low of $75.84.

“Today’s really about oil; its going lower caught a lot of people by surprise, and names in energy and the E&P sector are really getting hit hard,” a New York-based trader said.

Cobalt International Energy Inc.’s two convertible bonds bore the brunt of selling in the space and slid to 70 and below, from the mid to upper 70s on Monday.

Goodrich Petroleum Corp.’s 5% convertibles due 2019 also slid about 7 points to 75.

In addition, both of these Houston-based energy and gas companies reported disappointing quarterly earnings on Tuesday.

Chesapeake Energy Corp.’s convertibles were also mentioned in trade, and pieces of other energy convertibles also traded down especially among exploration and production companies, a New York-based trader said.

After the market close, LinkedIn Corp. launched an offering of $1.5 billion of five-year convertible senior notes that was seen pricing after the market close on Wednesday. The issue was talked to yield 0% to 0.5% with an initial conversion premium of 40% to 45%.

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