Convertibles better bid: SanDisk, Priceline, Intel off their lows; Peabody, Alpha Natural lower

By Rebecca Melvin

New York, July 1 – U.S. convertibles saw a better bid on the first day of the third quarter on Wednesday as equities and rates improved, indicating investors were more willing to take on more risk, market players said.

“It was more risk-on, and some people were topping up,” a New York-based trader said.

The improvement followed weakness on Monday and Tuesday as uncertainty related to the Greek debt crisis and then month end/quarter end weighed on the market.

“There was selling into month end and quarter end, and that’s why things were kind of down,” the trader said.

But on Wednesday, “everything was a little bit better,” the trader said.

The convertibles of SanDisk Corp., Intel Corp. and the Priceline Group Inc. followed the direction of their underlying shares but came off their lows on a swap basis, a trader said.

“They were beat up over the last week and are finding a little support, the trader said, calling the improvement better by about 0.25 point on swap.

Also in the convertibles market, both Peabody Energy Corp. and Alpha Natural Resources Inc. were lower. But how much of the price moves were related to Peabody’s second-quarter profit warning was debatable.

A trader referred to the possibility that Alpha Natural could file for Chapter 11 bankruptcy at some point.

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