Midday Commentary: new Colony Financial flat to weaker, older Colony off; China names in focus

By Rebecca Melvin

New York, Jan. 23 - Colony Financial Inc. priced a new $200 million convertible before the market open Thursday that was seen flat to weaker when released to secondary market action, in line with the underlying shares of the Santa Monica, Calif.-based real estate investment trust.

Colony's new 3.875% convertibles, which priced at the midpoint of terms, was quoted at 99.5 bid, 100.25 offered, and also at 99.75 bid, 100.25 offered with the underlying shares at $21.86, according to convertibles traders.

Colony's existing 5% convertibles due 2023, a deal also with $200 million outstanding, traded down a point or two in the early going, and were seen at 105 and 106, according to Trace data.

Colony shares pared early losses and were down 16 cents, or 0.7%, at $21.90 at about 11 a.m. ET.

Elsewhere, traders were watching the market segment of China-related names as the American Depositary Shares of those companies were under pressure.

"Those stocks are getting slaughtered on accounting concerns," a New York-based trader said.

A U.S. Securities and Exchange Commission judge Wednesday ruled against the Chinese units of the Big Four accounting firms, based on alleged failure of the firms to provide documents related to SEC investigations of China-based firms. The SEC ruling argues that the accountants should be barred from auditing U.S.-listed companies for six months.

In the early going, a level on Qihoo 360 Technology Co. Ltd.'s 2.5% convertibles due 2018 was 111.25 bid, 112.25 offered, with shares of the China PC and mobile internet security products provider down about 3% at $92.70, a New York-based convertibles analyst said. Earlier this month, the Qihoo convertibles traded at 111.75 with the shares at $87.17.

Other China names in the convertible space include NQ Mobile Inc.'s 4% convertibles due 2018, which traded at about 83 earlier this week. That marked an improvement from a drop for those convertibles to near 50 shortly after they were issued last fall amid fraud allegations.

Other names in the sector are Ctrip.com International Ltd., a Shanghai-based travel service provider, which has 0.5% convertibles, and E-House (China) Holdings Ltd., a Beijing-based real estate services company, which priced 2.75% convertibles at a discount to par of 97.5 in December.

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