Convertibles ‘mauled’ as equity sell-off intensifies; tech names lag; SunEdison contracts

By Rebecca Melvin

New York, Aug. 20 – U.S. convertibles gave way on Thursday and weakened significantly across the tech space and in other sectors as a slide in equities worsened.

“Everything got mauled,” a New York-based trader said of the convertibles market.

Even vol. names, or paper that is set up to benefit from market volatility, didn’t hold up well in the end on Thursday, the trader said.

Stock markets closed near their session lows as pessimism regarding global growth and oil markets took hold, and as speculation regarding the timing of a U.S. Federal Reserve rate hike shifted toward later rather than sooner for some market players.

For Thursday alone, the S&P 500 lost 43.88 points, or 2%, to 2,035.73, and the Dow Jones industrial average fell 358.04 points, or 2%, to 16,990.69. But the Nasdaq Composite stock index slumped the most, ending down 141.56 points, or 2.8%, at 4,877.49.

The steeper drop for the tech-heavy Nasdaq was also reflected in the convertibles market, where technology names fell harder than other sectors, including oil.

Shares of St. Peters, Mo.-based SunEdison Inc., a solar technology company, fell another $1.37, or 10%, on Thursday, to $12.10. The loss was on top of a 7% drop on Wednesday.

Debt strapped SunEdison has been hurt along with the solar sector by the downward spiral of oil prices amid a global oil glut.

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