Convertibles strong: Kodak up; Amylin gains dollar neutral; miners active; Janus to price

By Rebecca Melvin

New York, July 14 - Convertibles activity picked up noticeably Tuesday, with a trend to the upside sustained going into the close, market players said.

"It's been higher, and it was noticeably higher today," a Connecticut-based sellsider said.

"Everything is to buy," he added, mentioning Eastman Kodak Co. and Amylin Pharmaceuticals Inc.

The Amylin 3%s convertibles were higher by a point dollar neutral.

The strength was seen in both investment grade and lower grade issues.

"Everything was moving up, except if the paper was really broken," the sellsider said.

As for catalysts for the healthy action, one sellsider suggested that money was going to work in the secondary market in the aftermath of a lot of new issuance in recent months and in light of no new issuance this week so far.

However after the market close, Janus Capital Group Inc. launched an offering of $150 million of five-year convertible senior notes that were expected to price Wednesday after the end of trading.

It was also suggested that the convertible market was catching up with equities which rallied on Monday. The convertible market on Monday and early Tuesday had felt quiet, but that changed later Tuesday, he said.

Better than expected earnings from Goldman Sachs Group didn't hurt, he said.

Among names in trade were three mining concerns Coeur d'Alene Mines Corp., Newmont Mining Corp. and Vale SA.

Trico Marine Services Inc. and School Specialty Inc. were also mentioned as changing hands, as was Advanced Micro Devices Inc., which was said to be trading in line with its underlying shares.

Even CIT Group Inc.'s convertible preferred shares, which have been slumping in recent sessions amid liquidity concerns and talk of a potential bankruptcy filing, traded a little higher on Tuesday.

Kodak, Amylin add

Kodak's 3.375% convertible senior unsecured notes due 2033 traded higher by about 0.75 point from Monday and up 1.5 points from last week to 81.5 on Tuesday on decent volume, market sources said.

Shares of the Rochester, N.Y.-based imaging company gained nearly 5%, or 14 cents, to $3.06.

"I'd say it was catching up with yesterday, when equities rallied," a sellsider said.

Amylin's 3% convertibles due 2014 were seen ending at about 65 on ended down at 66 bid, 67 offered, trading at 66.5 late in the session.

Amylin's other convertibles were not heard in trade.

Shares of the San Diego-based biotech ended off 10 cents, or less than 1%, at $12.10.

Coeur d'Alene, Newmont, Vale active

Coeur d'Alene's 1.25% convertibles due 2024 traded up to 91 to 91.5, which was up from 89.5 or 90.

Shares of the Coeur d'Alene, Idaho-based silver and gold mining company closed stronger on the day, but off their highs, settling up by 29 cents, or 2.7%, to $11.24.

"On a flat equity day, and all the bonds traded up; definitely some action," a sellsider said.

Even though the session's headlines were quite mixed, the secondary market definitely found buyers, a second sellsider said.

Vale, which priced $941.7 million of three-year mandatory convertible notes in two tranches after the close of the market a week ago, saw those two issues in trade at levels a little higher than on Monday.

The Vale 6.75% convertibles due 2012 changed hands at 52.70 versus a stock price of $16.50 on Tuesday, compared to 51.2 versus a stock price of $16 on Monday.

The Vale 6.75% convertibles based on the preferred shares traded at 52..65 versus a stock price of $14.30, compared to 51.2 versus a stock price of $13.90 on Monday.

Shares of the Rio de Janeiro-based diversified metals and mining company settled flat to lower, down 8 cents, or half a percentage point, at $16.37.

Newmont Mining's 3% convertibles due 2012 traded at 111.75 versus a share price of $38.50 on Tuesday. The paper closed higher at 112.5 versus a share price of $39.11, which was up 66 cents, or 1.7%, on the day.

There were mixed signals about what direction the global economy was heading, with some pundits calling for further recovery and others suggesting another leg down is to come.

Janus to price

Janus Capital plans to price $150 million of five-year convertible senior notes after the close of markets on Wednesday.

The paper of the Denver-based asset management company was talked at a coupon of 3.5% to 4% with a 20% to 25% initial conversion premium, according to a market source.

There is a greenshoe for up to an additional $22.5 million of notes.

Janus also plans to price $150 million of common stock, with a 15% greenshoe.

Proceeds from the two registered off-the-shelf offerings, together with cash on hand, will be used to repurchase up to $400 million of the firm's outstanding 2011, 2012 and 2017 senior notes in a tender offer and for general corporate purposes, including the repayment or repurchase of any of series of notes that remain outstanding.

J.P. Morgan Securities Inc. and Goldman, Sachs & Co. are acting as joint book-running managers of both offerings.

Mentioned in this article:

Advanced Micro Devices Inc. NYSE: AMD

Amylin Pharmaceuticals Inc. Nasdaq: AMLN

Eastman Kodak Co. NYSE: EK

Coeur d"Alene Mines Corp. NYSE: CDE

Janus Capital Group Inc. NYSE: JNS

School Specialty Inc. Nasdaq: SCHS

Trico Marine Services Inc. Nasdaq: TRMA

Vale SA NYSE: VALE

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