Month-end, upcoming holiday weigh on convertibles; Arconic slides again; Micron declines

By Stephanie N. Rotondo

Seattle, June 30 – Trading in the convertibles market was slow Friday as market players focused on month-end activities and an upcoming holiday.

Even EZCorp Inc.’s new 2.875% convertible notes due 2024 – a $125 million issue that priced Thursday with an initial conversion premium of 30% – was not getting much attention.

However, a market source did see the bonds rising nearly a point to 101.25. The underlying stock was also better, firming a nickel to $7.70.

Meanwhile, Arconic Inc.’s 5.375% series 1 class B mandatory convertible preferred stock (NYSE: ARNCPrB) remained under pressure as the company continued to generate bad news.

Micron Technology Inc.’s 3% convertible notes due 2043 were also trending lower on the day.

Arconic remains weak

Arconic’s 5.375% convertible preferreds continued to lose ground on Friday as it was reported that it might have been a faulty engine part made by the company that delayed the launch of Boeing Co.’s 737 Max jet last month.

The convertible preferreds declined 69 cents, or 1.89%, to $35.80, on nearly 729,000 shares traded. The paper was off 99 cents, or 2.74%, at mid-morning, trading at $35.10.

Notably, the preferreds were trading at $42.55 just a month ago.

The company’s equity wasn’t faring all that well either, though it did recover from its intraday low.

The shares ended off 18 cents at $22.65. The stock was down 52 cents, or 2.28%, to $22.30 in early dealings.

It was reported Thursday that the lightweight metals engineering and manufacturing company might have been responsible for the delay to Boeing’s release of its new 737 Max jet. This comes in the wake of revelations that one of Arconic’s products was used in the cladding system at Grenfell Tower in London, which caught fire earlier this month, killing about 80 people and injuring at least 70 others.

Micron gets trigger unhappy

Micron Technology said Friday that with its stock price exceeding 130% of the conversion price on its 2032 and 2033 convertible notes for 20 out of 30 trading days, holders of those notes could now convert their debt into equity.

In trading, the company’s 3% convertibles dipped to a 113.5 to 113.75 context, which compared to opening levels closer to 117 at the open, according to a market source.

Another source pegged the issue at 113.25, off over 4 points.

The company’s equity waned $1.61, or 5.12%, to $29.86.

Micron is a Boise, Idaho-based semiconductor company.

Mentioned in this article:

Arconic Inc. NYSE: ARNC

EZCorp Inc. Nasdaq: EZPW

Micron Technology Inc. Nasdaq: MU

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