Energy convertibles weak; Helix Energy down 2.5 points; United Tech mandatories in line

By Rebecca Melvin

New York, July 21 – U.S. convertibles saw ongoing weakness in the energy sector on Tuesday despite a bounce back in crude oil prices above $50 per barrel. The weak tone in the broader markets weighed on the overall convertibles space as traders focused on earnings news.

After the market close Apple Inc. and Microsoft Corp. reported quarterly results that shot down their common stock in after-hours action, promising to weigh on the tech sector on Wednesday.

The tone was “definitely weak,” a New York-based trader said regarding energy.

Positive moves in many energy stocks and higher oil did nothing to cheer convertibles players. There were few bidders after the sector weakened on Monday, sources said.

And “there are no positive catalysts seen in the near term,” the New York-based trader said.

The convertibles of Helix Energy Solutions Group Inc. dropped 2.5 points following disappointing earnings news that pulled the common stock of the Houston-based oil services company down 17%.

Chesapeake Energy Corp.’s several series of convertible bonds were also called lower by about a point on Tuesday.

In the broader market, the tone was down.

United Technologies Corp.’s mandatory convertibles, which mature Aug. 1, moved lower in tandem with the common shares, which were down 7%, after the Hartford, Conn.-based building and aerospace technology company cut full-year guidance, citing weaker sales and headwinds caused by the strong dollar.

The United Technologies mandatories ended down $3.94, or 7% at $52.60.

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