By Rebecca Melvin
New York, Jan. 21 – Energy and some of the harder-to-borrow convertible names remained weak on Thursday despite a bounce back in crude oil prices and mostly higher equities, including gains for some of the severely beaten-down energy companies.
The current trends remained intact, a New York-based trader said of the convertibles market. Energy and some of the convertibles that have underlying stock that is difficult to borrow have borne the brunt of the downdraft while the rest of the convertible market has been fairly stable, the trader said.
Whiting Petroleum Corp. is one of the names that has been trading consistently weaker in recent weeks. The Whiting 1.25% convertibles due 2020 were trading around 45 bid, 46 offered in the early going Thursday, compared to the underlying common shares, which were at $5.44.
The Whiting bonds had been above 70 not too long ago, and the stock, which was up 18% on Thursday, has fallen 38% since Dec. 31.
Also on Thursday, the convertibles of Tesla Motors Inc., which is one of the harder-to-borrow names, was quoted lower. But Twitter Inc. was a little better following more speculation that the San Francisco-based social media company is a takeover target.
“The rumor with Twitter is gaining more traction, and those [bonds] were a little better to buy today,” a trader said.
West Texas Intermediate crude oil for March delivery traded at $29.76, which was up a good deal from the last day of trading for the February contract that ended at $26.76.
Meanwhile, the U.S. primary market remained moribund, with no new issuance on Thursday or for the year so far. In addition, there have been only three convertible offerings made outside the United States. They included Paris-based Safran SA’s €650 million of 0% convertibles, Beijing-based China Railway Construction Corp. Ltd.’s $500 million 0% coupon five-year convertible bonds; and U.K.-based Technology Enhanced Oil plc’s $6.02 million 6% six-year mandatory convertible bonds that priced at 95% of par.
Tesla Motors drops
Tesla’s 0.25% convertibles due 2019 traded at 84, which was down from about 87 on Wednesday. That issue was one of two tranches that priced together nearly two years ago for $1.38 billion in total.
More actively traded was the other half of that deal, Tesla’s 1.25% convertible due 2021, which traded at 79.875, which was down from about 82.4 previously, according to Trace data.
Tesla’s older 1.5% convertibles due 2018 traded at 161, which is more equity sensitive and was up from Wednesday but down from about 165 ish previously.
Shares of the Palo Alto, Calif., based maker and seller of electric vehicles and electric vehicle powertrain components was up $1.27, or 0.6%, at $199.97 at the market close. But for the year so far they are down more than 16% from Dec. 31.
Twitter adds slightly
Twitter’s 0.25% tranche A convertibles due 2019 were quoted up about 0.25 point at 85.25.
The Twitter 1% tranche B convertibles due 2021 were seen better by the same amount at 81.25.
“It’s nothing crazy,” a trader said, but they were improved a bit on the takeout rumors.
But News Corp. denied reports Thursday that it is considering an acquisition of the company.
Shares of the San Francisco-based social media company hit another all-time low on Wednesday, ending at $18.68, which was down 94 cents, or 5%, on the day. The shares slipped to an all-time low below $20.00 per share early this month and have continued to weaken.
Mentioned in this article:
| Safran SA | Paris: | SAF
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| Tesla Motors Inc. Nasdaq: TSLA
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| Twitter Inc. | Nasdaq: TWTR
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| Whiting Petroleum Corp. | NYSE: WLL
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