Traders see flight to safety as Life Technologies, Medtronic active; Suntech declines

By Stephanie N. Rotondo

Portland, Ore., Sept. 19 - The week got off to a slow start in the convertibles market Monday as fears about Greece grew and as spooked investors were either doing nothing or seeking safer options.

"It's really, really slow," said one convertibles trader.

"The whole market in general was by and large slow," said another trader. Still, while the equity markets fell and rallied, he said convertibles were lagging in terms of movement, leaving many convert issues unchanged on the day.

Life Technologies Corp. was one of the busier names of the day. There was no news out to drive the action, but one trader opined that, as the convertibles are putable early next year, it was simply a move to safer paper.

The trader further speculated that the flight to safety was why Medtronic Inc.'s convertibles were trading in good size.

Meanwhile, Suntech Power Holdings Co. Ltd. was also trading busily and the company's stock was down a fair bit. The losses were reportedly due to news that another Chinese-based solar company was facing environmental regulatory scrutiny.

Life, Medtronic safe plays

A trader said Life Technologies' 1.5% convertible notes due 2024 were trading around 102 bid, 102.25 offered.

"They traded pretty much outright," another trader said, also placing the convertibles around the 102 mark.

The stock closed down 85 cents, or 2.09%, to $39.80.

"People like this kind of play right now," the first trader noted, adding that the paper is putable in February. "It's an easy way to have a little short on. It's an extremely safe low-risk play."

Another "safe piece of paper that guys are hiding in" was Medtronic, he said.

The 1.625% convertibles due 2013 were pegged at par ¼ bid, par ½ offered.

The equity finished 95 cents lower, or 2.71%, at $34.07.

Suntech falls on Jinko news

Suntech Power's 3% convertible notes due 2013 - a "distressed piece of paper," according to one sellside source - was trading actively in the low-60s, a loss of 2 to 3 points.

The source noted that at current levels, the convertibles were yielding 39% to maturity.

The Chinese-based solar energy company's equity plunged early on in the session on news that fellow solar-panel maker JinkoSolar was facing environmental regulator scrutiny and protests at a factory in Haining, China. The protestors reportedly stormed the plant and alleged that a large amount of fish from a nearby river had died due to pollution caused by the factory.

The thought is that while Suntech was not directly involved in the incident, it could increase government scrutiny in the solar industry as a whole.

The stock ended down 11 cents, or 2.99%, at $3.57. The shares had traded as low at $3.30 before climbing back up.

Mentioned in this article:

Life Technologies Corp. Nasdaq: LIFE

Medtronic Inc. NYSE: MDT

Suntech Power Holdings Co. Ltd. NYSE: STP

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