Midday Commentary: Genco Shipping poised after missed coupon; DryShips mostly steady as shares slip

By Rebecca Melvin

New York, Feb. 19 - U.S. convertibles were still fairly quiet early Wednesday after Tuesday started off the holiday-shortened week with thin volume.

Genco Shipping & Trading Ltd.'s distressed 5% convertibles due 2015 traded down to 45 and 46 but also up at 53.75 and 54.25, according to Trace data, but that was still lower compared to 56.78 to 58 on Tuesday.

The New York-based dry bulk shipping company announced that it missed a coupon payment on the convertibles and struck a waiver of default with term loan lenders. The company did not make the $3.1 million payment on the convertibles as scheduled Feb. 18.

The company said that in light of continuing weakness in charter rates and required debt obligations, it is going to use a 30-day grace period to pay the coupon to review its financing options and consider restructuring alternatives.

DryShips Inc. was mostly steady in active trade but looked poised to slip a bit after the Athens-based dry bulk shipping and tanker company reported mixed quarterly results that missed on earnings but beat on revenue.

DryShips' 5% convertibles due December 2014 traded at 98.875 and thereabouts, which was about unchanged on Tuesday's closing level. But at late morning a trade hit the tape at 98, according to Trace data. Shares of the shipping company slipped about 4% in the early going.

For the latest quarter, DryShips lost $24.4 million, or 6 cents a share, which was worse than the 2-cents-per-share loss that some analysts had expected. But it was better than the loss of $129.8 million, or 34 cents per share, for the year-earlier period.

Revenue for the dry bulk business rose 30% to $45.4 million for the fourth quarter, while for the tanker business it was almost double to $11.9 million.

DryShips reported a net loss for the year of $223.1 million, or 58 cents a share.

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