Convertibles quiet in post-holiday trade; SanDisk active, in line; SINA seen slipping

By Rebecca Melvin

New York, April 21 - The convertibles market saw muted trade on Monday as U.S. markets reopened following the long holiday weekend for the Easter holiday and as most European markets remained closed for an additional day for Easter Monday.

Financial markets were closed Friday for Good Friday.

"We were pretty quiet with the European markets being closed; hopefully, tomorrow will pick up," a New York-based trader said.

A second trader said nothing that was "standing out" in the market.

SanDisk Corp.'s two convertible bonds were in focus and little changed following a pop last week, although the SanDisk 1.5% convertibles due 2017 were pretty strongly bid, with a profile that is starting to attract hedged investors, while the newer SanDisk 0.5% convertibles due 2020, of which $1.5 billion priced last fall, were little changed amid long-only interest, a New York-based trader said.

SINA Corp.'s 1% convertibles due 2018 were seen slipping back after a small pop last week associated with the initial public offering of Shanghai-based social media company Weibo Corp. on the Nasdaq stock exchange.

Genco Shipping & Trading Ltd.'s 5% convertibles due 2015 traded at 96 bid, 98 offered after the New York-based drybulk shipping company filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York to implement a pre-packaged financial restructuring that is expected to reduce its total debt by $1.2 billion and enhance its financial flexibility.

Cepheid's 1.25% convertibles due 2021 were not heard in trade although the underlying shares of the Sunnyvale, Calif.-based molecular diagnostics company fell 4% after a cut to full-year earnings guidance. The company reaffirmed full-year revenue guidance when the company reported quarterly earnings and revenue that beat estimates.

Meanwhile HomeAway Inc.'s 0.125% convertibles due 2019, of which about $400 million of the bonds priced at the end of March, were seen at 100 with shares of the Austin, Texas-based vacation rental site at $35.74 at the end of Monday.

The HomeAway paper has seen some outright buyers, and since the bond was issued with the stock a little higher, the bonds have outperformed the stock, a New York-based trader said.

Advanced Micro Devices Inc.'s 6% convertibles due 2015 were quiet despite a rally in the underlying shares of the Sunnyvale, Calif.-based semiconductor maker after the company reported better-than-expected first-quarter earnings and revenue late Thursday, as well as provided a strong outlook for the current quarter.

The AMD 6% convertibles were not heard to have traded on Monday but were last seen at 101.6.

There aren't many AMD bonds left after the tender, a Connecticut-based trader noted.

Equities edged up again, with the S&P 500 stock index notching its fifth consecutive gain, albeit on light trading discouraged by Europe's closed markets and little economic data or corporate earnings reports.

The S&P 500 added 7.04 points, or 0.4%, to 1,871.89, the Nasdaq stock market gained 26.03 points, or 0.6%, to 4,121.55, and the Dow Jones industrial average pushed up by 40.71 points, or 0.25%, to 16,449.25.

SanDisk active, little moved

SanDisk's 1.5% convertibles due 2017 traded at 169.809 versus an underlying share price of $83.87 early Monday.

That was roughly in line with where they had been trading.

Shares of the Milpitas, Calif.-based data storage company edged up 66 cents, or 0.8%, to $83.65.

The SanDisk 0.5% convertibles due 2020 were also little changed.

SanDisk's convertibles and stock rallied on Thursday after the company's better-than-expected first-quarter earnings.

"The bonds were much busier on Thursday, and the 1.5% convertibles were a little weaker compared to Thursday, but at this level the hedged funds are starting to dip their toes in on that one, and I see it a little better," a New York-based trader said.

The 0.5% SanDisk is more for the patient, long-only investor, he said.

SINA seen slipping

SINA's 1% convertibles due 2018 were seen a little weaker at 93.125 bid, 93.625 offered at the market close versus an underlying share price of $56.02.

That stock price was down 53 cents, or 0.9%, on the day.

The Shanghai-based online media company serves China and the global Chinese communities. The paper priced last November with an $85.31 stock reference price.

"They had a small pop with the Weibo IPO, but the bonds are coming in now in the aftermarket. They are not the most attractive profile for hedged buyers, and they are starting to crunch a little bit," a trader said.

Mentioned in this article:

Advanced Micro Devices Inc. NYSE: AMD

Cepheid Nasdaq: CPHD

Genco Shipping & Trading Ltd. NYSE: GNK

HomeAway Inc. Nasdaq: AWAY

SanDisk Corp. Nasdaq: SNDK

SINA Corp. Nasdaq: SINA

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