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Morning Commentary: SunEdisons drag near lows; International Consolidated Airlines sells €1 billion
By Rebecca Melvin
New York, Nov. 12 – The U.S. convertibles market was mostly see-saw action in the bigger, liquid names early Thursday, with SunEdison Inc. remaining a drag amid generally weaker equities and lower oil prices on the day after Veterans Day.
“There were no real significant credit events,” a New York-based trader said, and most of the action was in “on-the-run, cash names,” in which the big dealers hold inventories.
SunEdison’s stock had a huge rebound from a low of $4.06 back up to $5.01, pulling it into positive territory.
The SunEdison 2% convertibles traded at 57.3 early Thursday, which was down from 61 on Wednesday.
SunEdison’s 0.25% convertibles due 2020 traded at 41.5, which was down more than a point. And the SunEdison 2.375% bonds and the SunEdison 2.625% bonds were at 41.5 and 35.75, respectively.
PDC Energy Inc.’s 3.25% convertibles due in May 2016, which is a small issue that is rather illiquid, traded at 140 along with a 5% drop in the underlying shares of the Denver-based oil and natural gas company. Last week the company reported a disappointing third-quarter loss of $41.5 million.
In the primary market overseas, Britain’s International Consolidated Airlines Group SA launched and priced €1 billion of convertible bonds at the rich end of talked terms. The paper included €500 million of 0.25% five-year convertible bonds and an equally sized tranche of 0.625% seven-year convertible bonds, both with initial conversion premiums of 62.5%.
London-based International Consolidated Airlines is the holding company of British Airways, Iberia and Vueling, and proceeds of the deal are being used to repay a bridge loan to finance its acquisition of Aer Lingus Group plc.
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