Microsoft convertibles gain on reported Yahoo! bid; Hologic, Human Genome head upward

By Stephanie N. Rotondo

Portland, Ore., Oct. 5 - The convertible bond market was heading up during the midweek session.

"High yield stuff is better to buy after being for sale for a week or so," a trader said.

Another trader echoed that sentiment.

"Bids are filling up," he said. "People are dipping their big toe into the water. The theme continues to be names that are bigger and liquid are trading because people need to raise cash."

Additionally, playing in those types of names also provide quick exit strategies.

But despite the better buying environment, there was "still a lot of inventory to sell," the trader said.

Of the day's goings-on, Microsoft Corp.'s 0% convertible notes due 2013 moved up a bit as news reports indicated that the Redmond, Wash.-based software giant was considering making a bid for Yahoo! Inc.

In the health care sector, Hologic Inc. and Human Genome Sciences Inc. bonds were getting boosted, though there wasn't any fresh news out.

Also flying higher were oil and oil-related names, such as Hornbeck Offshore Services Inc.

Microsoft gains on Yahoo! bid

Microsoft is reportedly considering making a play for Yahoo!, which said last month that it is reviewing its strategic options.

A trader said the 0% convertibles were trending upward, seeing them at 101 versus a stock price of $25.90.

Though news reports out after the bell indicated that Microsoft wasn't ready as of today to make a bid, the company is said to be planning on reviewing Yahoo!'s financial once they begin circulating next week.

Microsoft and Yahoo! already have a search engine partnership.

Health care rises

The health care arena was getting some play on Wednesday, though without any specific news to act as catalyst.

A trader said Hologic's 2% convertible notes due 2037 had "found a floor" at 92.75, which was "where investors seem to be buying them."

He noted that the issue traded at 92 the day before.

"There's a buyer out there," he added.

Also up were Human Genome Sciences' 2.25% convertible notes due 2012.

"Someone is selling," a trader said, pegging the notes around 105.

Another trader placed the notes at 105 as well, versus a stock price of $12.50.

Hopes for Hornbeck

Hornbeck Offshore's 1.625% convertible notes due 2026 inched up to 92, according to a trader.

The move came as oil rose 8 cents to $79.76 per barrel.

Hornbeck was hit hard after the Deepwater Horizon oil rig explosion in April 2010. However, after moving most of its fleet to Brazil and other non-Gulf of Mexico areas, the company seems to be making a comeback.

The stock gained 69 cents, or 2.89%, to close at $24.57 on Wednesday.

Mentioned in this article:

Hologic Inc. Nasdaq: HOLX

Hornbeck Offshore Services Inc. NYSE: HOS

Human Genome Sciences Inc. Nasdaq: HGSI

Microsoft Corp. Nasdaq: MSFT

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