Morning Commentary: Trading tapers off ahead of Christmas; Royal Gold better to buy

By Rebecca Melvin

New York, Dec. 23 – Convertibles were quiet early Tuesday as the countdown to the Christmas holiday began to be measured in terms of hours instead of days.

“People are probably getting their last trades off as we speak, and by 12 today, they will be done,” a New York-based trader said.

There is a better feel to the market, the trader said, but there has not been a flurry of last minute portfolio trimming, probably given that many finished up the year early due to the sharp sell-off in early December.

“With credit widening and still caution with energy, no one wants to take any risk with credit or things on the cusp,” the trader said.

Royal Gold Inc.’s convertibles were mentioned as better to buy on the dip down in gold prices on Monday.

The Royal Gold 2.875% convertibles were seen at 102.5 bid, 103 offered. Shares were up $1.99, or 3%, to $62.90 in the early going Tuesday.

Goodrich Petroleum Corp. was getting a look after the Houston-based oil exploration and production company said it closed on a previously announced divestiture of certain non-core East Texas assets for $61 million. Neither the Goodrich stock nor the bonds really moved on the news. The Goodrich 5% convertibles were still seen in the low 50 range.

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