NII Holdings higher after stock upgrade; Energy Conversion jumps on takeout talk; AMD up

By Rebecca Melvin

New York, Sept. 8 - The convertible bond market was described as still quiet on Tuesday, the first session of what players hope will be a more active post-summer season. But news was driving the shares of a number of convertible names higher.

NII Holdings Inc. convertibles looked to edge higher as its stock gained amid a Wells Fargo & Co. upgrade to "outperform" based on an improving outlook.

There were some buyers for Energy Conversion Devices Inc.'s convertibles, which added about 4 points, and its stock soared 25% amid a takeout rumor, a New York-based sellside trader said.

Micron Technology Inc., a name often heard in trade lately, was fairly active again after UBS upgraded the company's shares to "buy" from "neutral."

And Exterran Holdings Inc., not often heard in trade, was pushed into the arena after Barclays Capital initiated coverage on the Houston-based natural gas compression company.

Advanced Micro Devices Inc. gained with its credit-default swaps tightening by about 100 basis points with news of the Chartered Semiconductor Manufacturing Ltd. acquisition by GlobalFoundries, which is a joint venture between majority owner Advanced Technology Investment Co. and AMD.

UCBH Holdings Inc.'s convertible preferreds remained quiet despite news that the San Francisco-based bank holding company is suspending or deferring its cash dividends on its common and preferred stock, and deferring interest payments on its trust preferred securities as part of a consent agreement with regulators aimed at enhancing the soundness of the bank.

Despite all the headlines, traders said that the session was slow and mostly quiet as desks that had thinned to the barest of ranks started to fill out again.

"It's pretty quiet. Just getting back into the flow," a Connecticut-based sellside trader said.

NII Holdings adds on upgrade

NII's 2.75% paper due 2025, with a call/put in one year in August 2010, traded up to 98 on Tuesday, compared to 97.5 bid, 97.5625 on Friday. Shares of the wireless company settled up $1.28, or 5.3%, at $25.68 on Tuesday.

Wells Fargo upgraded the company, which provides services in Latin America, to "outperform" from "market perform," citing promising trends in that region of the world, and saying that the company can meet or exceed street subscriber expectations for the remainder of 2009.

"Over the last six months, NIHD shares have appreciated 63% versus the Mexican iShares and Brazil iShares at +59%. While the stock has moved significantly higher due to the recovery in emerging markets - we think upside potential continues to exist as NIHD is close to realizing a few operating catalysts," according to the Wells Fargo note.

The note went on to say that NII Holdings' Mexico subscriber trends are recovering and Brazil is looking strong.

"While there are still three weeks left in the third quarter, we feel confident in NIHD's current trajectory," the note stated. "We are increasing our third-quarter net add estimate to 310,000 from 304,000 previously - due entirely to the strength we are seeing in Brazil."

The Wells research pointed to a spectrum auction in Mexico that may be a catalyst for NII Holdings if it is able to acquire spectrum inexpensively.

Energy Conversion jumps

Energy Conversion's 3% convertibles due 2013 traded as high as 72.75 and were last at 70.25 after starting the day around 65, according to a New York-based sellside trader, who reported takeover rumors in the name.

"The bonds were up quite a bit," the sellsider said.

Applied Materials Inc. was named in published reports as the potential acquirer.

Shares of the Rochester Hills, Mich.-based Energy Conversion traded up $2.60, or 25%, to $13.01 on Tuesday.

Energy Conversion makes thin-film solar modules. It is one of a number of solar panel makers that have convertibles. Others include JA Solar Holdings Co. Ltd., LDK Solar Co. Ltd., Yingli Green Energy Holdings Co. Ltd.

UCBH eyed at about 250

UCBH 8.5% convertible preferreds, which priced in June 2008, were seen at about 250 with its common down 14% to $1.02.

It had news but still wasn't trading because there is no stock borrow in the name, a New York-based sellside trader said.

"You can't borrow. The stock is way down, but it is way hedged," the sellsider said. The last trade seen was July 28, when there were two main holders, including Fidelity and T. Rowe.

"Without there being a borrow, it would trade with a slight premium over, something like 250 bid," the sellsider said.

Still there may be potential for the company given its ties to China, which may be the source of needed additional capital, the sellsider suggested.

The San Francisco-based holding company for United Commercial Bank, a state-chartered commercial bank serving Chinese communities and American companies doing business in China, said Tuesday that it has reached agreement with the Federal Deposit Insurance Corp. and the California Department of Financial Institutions on an action plan and that its chairman, president and chief executive Thomas Wu resigned.

In addition its chief operating officer and former chief credit officer, Ebrahim Shabudin, plans to resign from the company.

The company also said its FDIC agreement is aimed to enhance the strength and stability of the bank and its operations. It also received and adopted the findings and recommendations of the Investigation Subcommittee of the Board Audit Committee's independent investigation, which began on May 15, enabling the company to move forward with its financial restatement.

The company is also accelerating certain capital planning initiatives, including a review of all capital raising and strategic alternatives to maximize shareholder value.

Mentioned in this article:

Advanced Micro Devices Inc. NYSE: AMD

Energy Conversion Devices Inc. Nasdaq: ENER

Exterran Holdings Inc. NYSE: EXT

Micron Technology Inc. NYSE: MU

NII Holidngs Inc. Nasdaq: NIHD

UCBH Holdings Inc. Nasdaq: UCBH

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