Convertibles quiet: Yandex lower on swap; CETV slips in early going; EZCorp down outright

By Rebecca Melvin

New York, July 21 – A pair of convertibles with ties to the region where nervous attention is focused on the downed Malaysian Airlines plane near the Ukraine-Russia border traded lower early Monday.

Yandex NV’s convertibles fell on an outright basis and were said to be lower by a point on a dollar-neutral, or hedged, basis, as shares of the Dutch-based internet company for Russia and internationally extended a slump since Thursday when the plane went down.

Central European Media Enterprises Ltd.’s convertibles were also seen in trade and were lower as shares of the central and eastern European TV broadcaster were also weaker again, having dropped sharply on Thursday.

But later, U.S. convertibles traded quietly, and Monday’s session overall was said to be a snoozer, market players said.

The CBOE Volatility index had also spiked up to 13.60 at midmorning before tapering down to 12.47 by the market close.

“You can follow the VIX to follow credit. It’s hard to keep this market down; no one seems spooked right now,” a convertibles sellsider said.

Geopolitical concerns are also focused on the Hamas-Israeli conflict in the Gaza strip, where violent fighting persisted through the weekend.

Meanwhile, EZCorp Inc.’s convertibles were trading actively and down sharply on an outright basis along with a slide in the underlying shares of the Austin, Texas-based pawn store operator.

A drop of about 6.5-points in the convertibles corresponded to a 12% drop in the underlying shares following news that the company’s chief financial officer, Mark Kuchenrither, was appointed interim chief executive officer and president and will also remain chief financial officer, and that Charles A. Bauer of the board of directors has resigned after joining the board in May.

Market players said convertibles overall were very quiet but that there were numerous earnings reports on tap this coming week that should spark some trading. A non-convert issuer, Apple Inc. will be a focus on Tuesday as a technology sector bellwether, one New York-based trader said.

“We’re waiting for Tuesday,” a second New York-based trader said.

Equities were mildly lower. The S&P 500 stock index shed 4.59 points, or 0.2%, to 1,973.63; the Dow Jones industrial average lost 48.45 points, or 0.3%, to 17.051.73; and the Nasdaq stock market slipped 7.44 points, or 0.2%, to 4,424.70.

Yandex contracts

Yandex’s 1.125% convertibles due 2018 were quoted at 90.375 bid, 91.125 offered on Monday with the underlying shares at $29.66.

The bond was “in about a point on swap,” a Connecticut-based trader said.

Shares of the Dutch-based internet company for Russia and internationally have dropped sharply since the plane crash Thursday and were down another $1.21, or 4%, to $29.52 early Monday. Shares closed not far off that mark at $29.64.

Yandex priced $600 million of the bonds last December.

CETV slips

Central European Media’s 5% convertibles due 2015 were also a little lower, changing hands early Monday at 97.75, which was down from about 98 on Friday and down from about 98.5 on Wednesday, according to Trace data. There were no trades in the bond reported by Trace on Thursday.

Shares of the central and eastern European TV broadcaster have also dropped sharply since the crash and were down another 2 cents, or almost 1%, at $2.42 early Monday. But the shares recouped to end the session unchanged at $2.44.

A New York-based trader said there was one big seller and three buyers in the CETV 5% convertibles on Friday.

“They’ve traded around 98 for months. They may yield more but the risk is still 98 points,” the trader said.

EZCorp drops outright

EZCorp’s 2.125% convertibles due 2019 were quoted at 87.75 bid, 88.75 offered with the underlying shares down at $9.75 near the end of the session.

That was down further from the level earlier Monday at 90.875, which was down 4 points on the day on an outright basis, according to Trace data.

Shares of the Austin, Texas-based pawn store operator fell $1.36, or 12%, to $9.76 after news of its management and board shuffle.

EZCorp priced $230 million of the convertibles last month via Morgan Stanley & Co. LLC with Jefferies & Co. and UBS Securities LLC as co-managers.

Mentioned in this article:

Central European Media Enterprises Ltd. Nasdaq: CETV

EZCorp Inc. Nasdaq: EZPW

Yandex NV Nasdaq: YNDX

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