Convertibles market players watching for next trend; Ares Capital, American Realty better

By Rebecca Melvin

New York, Oct. 20 – U.S. convertibles were firmer amid tentative volume on Monday as market players remained poised for trends to develop following last week’s whipsaw action and watched for whether new deals would emerge.

“People were starting to feel better,” a New York-based trader said. “They just want to see a trend. They got really hurt last week, and they made some of it back, and now they are waiting to see what happens next.”

A second New York-based trader said the market was stabilizing amid healthy buyers.

Corporate earnings reports were expected to be a driver of convertibles trading this week, but they weren’t a major feature on Monday.

Ares Capital Corp.’s convertibles were in trade and trending better, as were American Realty Capital Properties Inc.’s 3.75% convertibles due 2020, which looked better, a New York-based trader said.

A large chunk of Mylan Inc.’s 3.75% convertibles traded. They were seen at 376.6, according to Trace data.

“There was about $20 million of Mylan that traded north of parity,” a trader said, noting both a swap seller and buyer.

And the small issue of Anacor Pharmaceuticals Inc.’s 2% convertibles, which priced earlier this month, were indicated higher at about 111.875 from 106 amid a 7% rise in the underlying shares of Palo Alto, Calif.-based biopharmaceutical company to $27.42, according to a market source.

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