Slow, choppy pre-holiday session ends higher

By Ronda Fears

Nashville, Tenn., July 3 - It was a seesaw session, but the slow pre-holiday market closed higher. That eased many players' minds, but most are still a bit apprehensive about Friday.

Mirant's new deal continued southward, however, and there are no firm deals on the calendar. So, what with dealer desks working with a small crew and buyside desks slow, due to the holiday, there was fodder for the rumor mills swirling about.

Market buzz Wednesday focused on a potential deal from USBancorp, as it faces roughly a $1.5 billion put on its convertible next month. But the talk did not pan out.

"It was good to see the markets end on a high note," said a dealer.

"We were wondering for a while. It looked like things could go either way. So, we'll take a break and hope that we manage to repeat this on Friday. That's iffy, though."

The day began on a negative note, with yet another warning from Advanced Micro Devices and many chips were weak, but software gave the tech group a nice lift.

Software names were particularly strong, traders said, for most of the day.

"The thinking is that a lot of this group [software] has gotten to a place where they are attractive," said a convertible fund trader in New York.

Biotechs also were weak for most of the session, traders said, but a late-day buying spree provided a bounce and boosted the Nasdaq into firm positive territory. Several biotech converts, however, did not participate in that party.

The Nasdaq closed up 1.65% and the Dow industrials gained 0.5%.

Tyco, however, continued to lose ground.

Dealers said, though, that buying in Tyco is expected to resume soon.

"It seems they [Tyco] have enough money now to pay the puts coming up, so we expect buyers to step up soon," said a dealer.

"Of course, we've not ruled out a sweetener [on the puts]. And, there are some people who thing Tyco will come back to the capital markets with a deal to refinance the converts."

Tyco shares eked out a 1c gain to $12.66 but the 0% convertibles were lower. The 2020 issue was quoted down 1.125 points to 60 bid, 60.5 asked and the 2021 issue down 0.125 to 67 bid, 67.5 asked. The 2021 issue was quoted at 66.875 bid, 67.375 asked at one shop.

Mirant's new 5.75% due 2007 continued to decline, losing 2.75 points on the day to 95.25 bid, 96.25 asked as the stock closed off 21c to $5.50

Talk was circulating about a new deal from USBancorp due to the upcoming put on the 0% due 2021 but it didn't gel, at least for now.

"We were working on a deal, but I think it may have been pulled," said a source at the investment bank rumored to lead the new USBancorp deal.

The USBancorp 0% due 2021 lost 0.25 point to 75 bid, 75.5 asked as the underlying stock lost 69c to $21.76. The issue is putable Aug. 6 at 76.415.

Despite AMD's warning, the second in as many weeks, the group held firm for the most part, traders said, as did AMD in the face of the news.

AMD cut is second quarter sales forecast to the $600 million neighborhood, down from $620 million to $700 million forecast by the company two weeks ago.

AMD shares ended off 37c to $8.43. The 4.75s due 2022 were quoted off 0.25 point to 72.75 bid, 73.25 asked.

Sanmina and Celestica were higher in the chip sector.

Biotechs were weak for most of the day, despite Invitrogen reaffirming its guidance for second quarter. Traders said the group as a whole firmed up, but several converts did not participate fully. Nor did Invitrogen.

Invitrogen said it still sees second quarter EPS at the upper end of its guidance of 44c to 46c with revenues of $160 milliion to $163 million.

Invitrogen shares closed up 5.81c to $29.981. The 2.25s due 2007 were quoted up 0.625 point to 76 bid, 76.5 asked. The 5.5s due 2006 were quoted unchanged at 86.5 bid, 87.5 asked.

Amgen was another weak biotech. The stock ended down $1.12 to $35.83 and the 0% due 2032 lost 0.5 point to 66 bid, 66.25 asked.

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