Midday Commentary: NQ Mobile in focus after fraud allegations; Qihoo, Ctrip.com under pressure

By Rebecca Melvin

New York, Oct. 28 - NQ Mobile Inc.'s 4% convertibles, which debuted in the convertibles market less than three weeks ago, were quoted at 40 bid, 50 offered early Monday in continuing action related to fraud allegations against the China-based mobile security company by research firm Muddy Waters.

NQ Mobile shares were also dropping again in the early going, trading down 17% to $8.84. The shares had been at $23.00 early Thursday before the research surfaced.

For the NQ convertibles though "bid side had been 3 points to 5 points over the stock," a New York-based trader said.

The meltdown of NQ had put pressure on other China names in convertibles.

Qihoo 360 Technology Co. Ltd., which priced $600 million of 2.5% convertibles at the end of the summer, saw that paper at 109.25 bid, 109.875 offered early Monday with shares of the China PC and mobile internet security products provider at $84.74. After the Qihoo convertibles deal priced at the end of August, it was seen at 105 bid, 106 offered with the shares at $77.80.

Ctrip.com International Ltd., which priced $180 million of 0.5% convertibles in the middle of September, has also been under pressure, a trader said. The bonds were not heard early Monday, but shares of the Shanghai-based travel service provider have slipped 5% since the middle of Thursday. On their debut Sept. 19, the Ctrip.com convertibles jumped to 109.25 to 109.825 when the underlying shares were $18.40.

"QIHU and CTRIP are down 3 points to 4 points in the last few days. They are recovering a bit now," a Connecticut-based trader said.

Elsewhere, Dendreon Corp.'s convertibles were in focus after shares of the Seattle-based biotechnology company jumped on news the company is looking to sell itself.

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