Morning Commentary: Volume better; salesforce, Twitter add in line with shares; Host Hotels active

By Rebecca Melvin

New York, Oct. 13 – U.S. convertibles action picked up on Tuesday as market players returned to work from a three-day weekend in observance of Columbus Day.

Trading volume at late morning was $111 million of bonds, which was more than double Monday’s volume at about the same time, according to Trace data.

Technology was a focus in the early going. The salesforce.com Inc. convertibles traded mostly in step with shares of the San Francisco-based cloud computing company. The company announced a $100 million investment commitment in European startups from Salesforce Venues. The intention is to fuel cloud innovation and customer success.

The salesforce.com 0.25% convertibles due 2018 traded as high as 131.25, which was up from about 128.5 previously. But the convertibles also traded lower at about 130 and back in the 128 range. Salesforce shares were up 2% at $77.50.

Twitter Inc.’s convertibles were higher on an outright basis as shares of the social media site gained following the announcement that the company plans to lay off about 8% of its workforce, or up to 336 positions.

Twitter also said that it expects revenue and adjusted earnings to come in above the high end of its previously forecast range for the third quarter. The restructuring plan comes about a week after co-founder Jack Dorsey returned as Twitter’s chief executive.

Twitter’s 0.25% convertibles due 2019 changed hands at 88.5, according to Trace data, and Twitter’s 1% convertibles due 2021 were at 86.3

Twitter’s stock was up about 5.4% to $30.30.

A New York-based trader said it looked like the bonds were moving up in line.

Also seeing high volume was Host Hotels & Resorts Inc. Its 2.5% convertibles due 2029 were quoted at 138.5. Shares were off about 12 cents at $17.55 at late morning on Tuesday.

Last week the company priced $400 million of 4.5% straight notes due 2026. On Friday, shares breached its 50-day moving average to the upside.

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