SanDisk, Bunge up on yield trades; Micron Technology slips with stock; Incyte down, active

By Kenneth Lim

Boston, Jan. 15 - Tech-related names in the convertibles market ended mixed on a quiet Friday as strong results from Intel Corp. fought against a poor day for underlying stocks.

SanDisk Corp. ended the day slightly better, while Micron Technology Inc. eased lower with its stock.

In the biotech space, Incyte Corp.'s older notes were also down but continued to see active trading after a favorable report from JPMorgan earlier in the week.

Trading activity was otherwise dominated by the usually more liquid names.

Amgen Inc.'s 0.125% convertible due 2011 changed hands at 99.125 versus a stock price of $56.25, while its 0.375% convertible due 2013 traded at 100.125 against the same stock price. The common stock closed at $56.25, up by 0.16% or 9 cents.

Amgen is a Thousand Oaks, Calif.-based biotech company.

Conexant Systems, Inc. was quiet after the company filed a shelf registration to offer up to $100 million of stock, preferred stock, debt or warrants. The Newport Beach, Calif.-based semiconductor systems maker saw its stock slide 4.67%, or 14 cents, to close at $2.86.

Conexant's 4% convertible notes due 2026 did not trade on Friday.

"That's not a name I see a lot," a sellside trader said. "I don't think you can read too much into this announcement so soon. If they offer equity, that could be good for the convert, but if they offer debt, that could be a negative for the credit. It could go either way."

Bunge Ltd.'s 4.875% convertible preferred gained slightly after Vale SA said it plans to buy Bunge's stake in a Brazilian fertilizer company for $3.8 billion.

The preferred closed at 97, up 2 points, while Bunge common stock closed at $69.85, up by 2.61% or $1.78.

"At the moment it's more of a yield play," the trader said. "It's a solid credit. If they get $3.8 billion, that's even better."

Thin volumes

Trading volumes were notably thin with the markets closed on Monday to observe Martin Luther King Jr. Day.

One trader said the weak equity market also put a damper on trading.

A West Coast-based trader said: "It's a Friday before a three-day weekend. A lot of people left work already."

Convertible prices were mostly tracking their underlying stocks with little to push premiums either way.

"It's a dull day," the West Coast trader said. "The stuff we've been trading has just been trading in line...We need issuance; I'm sure you've been hearing that."

Techs end mixed

Tech names were relatively active on Friday, as investors reacted to positive results from Intel.

"Intel's results looked good," a sellsider said. "They beat expectations. I thought there was some positive stuff there. It's a bellwether name, so what's good for Intel is good for everyone else."

Intel, the Santa Clara, Calif.-based chip giant, reported a fourth-quarter profit of $2.3 billion, or $0.40 per share, a stark improvement from the $234 million, or $0.04 per share, earnings a year ago.

But tech paper had a mixed day as investors met a headwind in the equity market, which fell on Friday.

"The stock market's not cooperating," the sellsider said.

Among the tech names, Micron's 1.875% convertible notes due 2014 slipped lower by 2 points to trade at 95.25 against a common stock price of $10.20 on Friday.

The common stock dropped 5.59%, or 60 cents, to close at $10.13.

Micron is a Boise, Idaho-based maker of memory chips.

"Micron is active, but it's just trading down, nothing very exciting," one trader said.

SanDisk, a Milpitas, Calif.-based flash memory maker, fared better on Friday, gaining as investors sought the yield from the convertibles.

SanDisk's 1% convertible due 2013 traded at 83.75 versus a share price of $28.25, while the stock declined by 5.38%, or $1.59, to close at $27.98.

"Those are trading slightly better," the trader said. "The stock's come in, and outright guys are just buying them for the yield."

Incyte remains active

Incyte's old 3.5% convertible due 2011 was seen at 105 against a common stock price of $9.85, lower by a half-point, as investors continued to trade the stock after it was highlighted by JPMorgan earlier in the week.

"Incyte traded a little bit with the stock, which has been doing well after the JPMorgan conference," a trader said.

Incyte, a Wilmington, Del.-based drugmaker that was picked by JPMorgan as a top biotech stock for 2010, presented at the JPMorgan Healthcare Conference on Tuesday. But its stock came under pressure on Friday after UBS downgraded Incyte to "neutral" from "buy" with a price target of $10.50.

Mentioned in this article:

Amgen Inc. Nasdaq: AMGN

Bunge Ltd. NYSE: BG

Conexant Systems, Inc. Nasdaq: CNXT

Incyte Corp. Nasdaq: INCY

Intel Corp. Nasdaq: INTC

Micron Technology Inc. Nasdaq: MU

SanDisk Corp. Nasdaq: SNDK

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