Quiet start to holiday-shortened week; energy patch ‘feels better’; Invacare launches deal

By Rebecca Melvin

New York, Feb. 16 – U.S. convertibles were modestly better on Tuesday but not showing the same amounts of improvement as U.S. equities, which saw Friday’s rally remain intact following the long holiday weekend in observance of Presidents Day.

Energy equities were mixed, and energy convertibles hadn’t yet matched those moves, but in general the energy space felt more stable, according to several market sources.

One sellsider reported a single trade in Energy XXI Ltd.’s convertibles after word that holders of the notes may be able to put the bonds as the Houston-based oil and gas company faces the risk of having its low stock price trigger a put option under its $400 million of 3% convertible notes due 2018. Those bonds traded once at 0.75, and they were quoted 1.25 later in the day.

The pricing indicated that investors didn’t think there was any possibility those bonds would be covered.

Energy XXI on Tuesday also reported a wider-than-expected quarterly loss and said it will forgo an interest payment on EPL Oil and Gas Inc.’s 8.25% senior notes due 2018 in an effort to preserve liquidity while cutting leverage.

Meanwhile, the primary market, which has been hibernating for the most part this year, saw a new deal launched from Invacare Corp. for $130 million of convertible senior notes that were expected to price after the market close on Wednesday.

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