Liquidity continues to lag in convertible space; SL Green busy post-earnings; SanDisk eyed

By Stephanie N. Rotondo

Seattle, Jan. 29 – The recent volatility in the stock market continued to weigh on activity in the convertible bond market on Friday, a trader said.

“Accounts are... the market has ‘shock and awe’d’ them,” the trader said. “Guys are just sitting around; they don’t know what to do. They are afraid to put their toe in the water.”

“Customers are out of ideas,” he further noted. “They will trade a name if there is news out; otherwise, there is nothing to do.”

That theory seemed to have merit in regards to Friday trading, as SL Green Realty Corp. was busier than most following the release of the real estate investment trust’s earnings late Thursday.

A market source placed the 3% convertible notes due 2017 at 126.6 against a stock price of $97.11 toward the end of the day.

The stock closed at $96.61, up $3.19, or 3.41%.

For the fourth quarter, the company posted adjusted funds from operations of $1.62 per share. That was above Zacks Consensus estimate of $1.61 per share and up from $1.45 a share the year before.

SanDisk Corp. meantime continued to be on the active side, a trend that has been in place all week. The paper was on the rise in the wake of the company’s earnings release on Wednesday and new reports indicating its takeover by Western Digital would be completed by the end of June.

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