Convertibles firm into strength of U.S. equities; Newmont drops; TimkenSteel on tap

By Rebecca Melvin

New York, May 24 – U.S. convertibles were firmer on Tuesday building on the strength of equities and credit, with the exception of gold and metals, and putting gold-mining company Newmont Mining Corp. at the top of the trading-volume chart for the day at pricing that was 2 points lower on an outright basis, a New York-based trader said.

U.S. equities notched their strongest gains in about two months as market players grappled with the idea that the U.S. Federal Reserve may soon raise interest rates again. Recent comments from Fed policy makers have pointed to a rate hike in June, which is sooner than many market players had been expecting.

The Dow Jones industrial average and the S&P 500 stock index each rose about 1%, leaving the Dow at 17,706.05 and the S&P at 2,076.06; and the Nasdaq composite index rose 2% to close at 4,861.06.

Newmont was the top volume bond, according to Trace data, and down 2 points outright, but unchanged on a dollar-neutral, or a hedged, basis, the trader said.

Newmont shares fell $2.09, or 6%, on Tuesday, rendering the bonds’ move lower about equal, or about flat, on swap on the day.

After the market close, TimkenSteel Corp. launched an offering of $75 million of five-year convertible senior notes for pricing ahead of the open on Wednesday. The terms talked for the deal were for a 5.5% to 6% coupon and a 20% to 25% initial conversion premium.

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