Newmont jumps with gold; XL Capital edges up outright; but Micron lower; Sirius XM Radio quiet

By Rebecca Melvin

New York, Feb. 11 - Newmont Mining Corp. convertibles jumped in trade Wednesday in tandem with higher gold prices as investors continued to seek the safety of gold.

The moves came amid uncertainty about the U.S. banking and financial system a day after president Barack Obama's administration's bank bailout program was unveiled and as Congress and the White House agreed on a compromise stimulus bill that will usher in $790 billion in spending.

XL Capital Ltd. convertible preferreds edged up in trade by about half a point, but they didn't keep pace with the common shares that zoomed up after the Bermuda-based insurer reported a wider, but better-than-expected, fourth-quarter loss, cut its quarterly dividend and said it will shed 10% of its work force.

Micron Technology Inc. convertibles were lower on a report that the Boise, Idaho-based memory chip maker is seeking to consolidate with its Taiwanese peers, an effort that will at once curb competition and open up avenues of finance from the government of Taiwan, a sellsider said.

Meanwhile, Sirius XM Radio Inc. convertibles were quiet as headlines swirled over whether the satellite radio company can avert bankruptcy.

"It seemed pretty quiet," a West Coast-based sellsider said about Wednesday's market. "It was pretty much a continuation in terms of Treasuries. People are concerned about what happens to the banks, and the details aren't there."

"It's almost like a stand off," a New York-based sellside analyst said regarding recovery. "Lending has to take place. But with the housing market like it is, why would they want to lend?"

Newmont jumps in trade

Newmont's 3% convertibles due 2012 traded up to 116 Wednesday from about 112 on Tuesday. Shares of the Denver-based gold and copper mining concern gained $3.00, or nearly 8%, to $42.35.

Newmont gained in tandem with gold prices that jumped to a six-month high on Wednesday. Gold futures for April delivery rose $30.30, or 3.3%, to $944.50 an ounce on the Comex division of the New York Mercantile Exchange.

Newmont's series B 1.625% convertible senior notes due 2017 traded at 109, and the Newmont series A 1.5% convertibles traded at 112.

XL Capital edges higher

XL Capital's preferred Y shares traded at 10.50 versus a share price of $4.55 intraday and were seen closing at 10.50 bid, 10.75 offered versus a closing level of $4.68.

"It was up about 50 cents. They said they had enough capital to stay independent," a New York-based sellside analyst said.

Shares of XL Capital surged $1.78, or 61%, to $4.68.

XL cut its quarterly dividend by 47% to 10 cents a share and said it plans to lay off 10% of its work force. The insurer reported a wider fourth-quarter loss mostly on a write down for goodwill and investment portfolio restructuring charges.

"We are excited at the prospects for 2009. We have ample capital for our ratings, we have market leading talent and as evidenced by our Jan. 1 renewals, a quality book of business," chief executive Michael S. McGavick said in a release.

"We have completed one cost reduction initiative on time and on budget and have identified further ways to deliver cost effective support to our underwriters that we will implement in 2009," McGavick said.

"Even at what we expect to be the lowest point of the insurance cycle we expect to report an ROE in the low to mid teens for 2009. We have reached this position by maintaining our steadfast commitment to disciplined underwriting and by reducing uncertainty in many elements of our business," he said.

Micron heads lower

Micron Technology's 1.875% convertibles due 2014 were at 42 bid, 42.25 offered, which was down from 45 versus a share price of $4.00 on Monday. Shares of the company closed down 14 cents, or 3.5%, to $3.88.

Micron's 2.5% convertibles due February 2010 were not seen in trade as there is only a relatively small $70 million left outstanding, a sellsider said.

"There was a news story that Micron was looking to consolidate with more DRAM guys in Taiwan," the New York-based sellsider said.

"The bonds were a little lower perhaps on the uncertainty of what Micron is looking to do, how much they are going to have to pay. They are looking to pick up some of the guys and tap into government assistance in Taiwan," the sellsider said.

Sirius mostly quiet

Sirius XM Radio's convertibles were bid only at very low levels.

Uncertainty is swirling around Sirius XM, formerly Sirius Satellite Radio Inc., about whether the New York-based satellite radio provider will be forced to file for Chapter 11 bankruptcy protection or whether Dish Network Corp. chief executive Charlie Ergen might exchange control of the company for a capital injection and debt restructuring.

The convertible paper ranged from 6 to 20.

Mentioned in this article:

Newmont Mining Corp. NYSE: NEM

Micron Technology Inc. NYSE: MU

Sirius XM Radio Inc. Nasdaq: SIRI

XL Capital Ltd. NYSE: XL

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