American Realty wavers in active trade; Red Hat up on earnings; ServiceNow ‘up a little’

By Rebecca Melvin

New York, Dec. 19 – American Realty Capital Properties Inc.’s convertibles, which have been a feature of trade for much of the past week, were weaker in active trade early Friday but regained ground by day’s end.

The American Realty convertibles had traded lower with weaker shares after a former executive filed a lawsuit against the company on Thursday related to an ongoing accounting scandal swirling around the New York-based real estate investment trust.

Red Hat Inc.’s 0.25% convertibles due 2019 charged higher and shares were up by 10% after the Raleigh, N.C.-based open-source software company reported third-quarter results that beat estimates.

Elsewhere, ServiceNow Inc.’s 0% convertibles due 2018 were in trade and little changed, although still a little higher on the week, a New York-based convertibles sellsider said.

The ServiceNow bonds were seen at 113 bid, 114 offered against shares of the San Diego-based cloud IT services company that were at $69.00, up 92 cents, or 1.3% on the day.

Earlier this week, RBC Capital Markets upgraded ServiceNow to a top pick from “outperform” and raised its share price target to $80.00 from $70.00.

Convertibles continued to notch improvements in tandem with better bidders after being hurt on Tuesday by seemingly indiscriminate selling.

Investors had been attempting to reduce absolute risk heading into year-end. But on Thursday and Friday, many decided it was time to step in and take advantage of beaten down paper.

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