ADM dominates trade; pricing steady as new paper continues to elude market; DDR better

By Rebecca Melvin

New York, Oct. 1 - Archer-Daniels-Midland Co.'s 0.875% convertible was the most actively traded issue in the U.S. convertibles market for a second straight day Tuesday as the rest of the space remained relatively quiet with no new issues launched or priced. Equities rose in the wake of a partial government shutdown that began overnight in the absence of a Capitol-approved funding plan.

The ADM bond, which matures in early 2014, is a large, liquid convertible that traders seem to be passing back and forth at very small increments of profit. The bonds ended the session flat to 0.25 point lower at 101.625 bid, 101.9 offered, a New York-based trader said.

Teleflex Inc.'s 3.875% convertibles due 2018 were quoted in early action and traded in line with the underlying shares of the Limerick, Pa.-based medical device company. The notes were 140.75 bid, 141.625 offered versus an underlying share price of $82.28 in the early going, with shares that were fractionally higher.

SandRidge Energy Co.'s 8% convertible perpetual preferred shares were bid at 100.75, which is where the shares traded on Monday, a New York-based trader said. Shares of the Oklahoma City-based oil and natural gas company were up 24 cents, or 4%, at $6.10 in early action and ended the session up 5%.

Ohio-based shopping mall real estate investment trust DDR Corp. was also an active name and about 2 points higher on an outright basis, according to Trace data, with higher shares. On a dollar-neutral, or hedged, basis, they were seen "creeping up."

Convertibles of fellow REIT SL Green Realty Corp., a New York-based trust specializing in office properties, were also quoted in the market amid higher shares at 121.25 bid, 122.25 offered versus an underlying share price of $89.60.

Meanwhile, Morgans Hotel Group Co.'s 2.375% convertible due 2014, which trades infrequently, was in focus but wasn't heard to have traded as shares of the New York-based boutique hotel chain dropped sharply after word that the company's board will not terminate its stockholder protection rights policy Oct. 3 as per the previous policy but will keep the shareholder protection rights policy in effect until October 2015.

Equities ended up as lawmakers continued to argue in Washington over next steps after the government partially shut down because funding legislation was unable to pass both the House and Senate. Worries about a possible shutdown had weighed on the markets in recent sessions.

On Tuesday, the S&P 500 stock index added 13.45 points, or 0.8%, to 1,695.00; the Dow Jones industrial average gained 62.03, or 0.4%, to 15,191.70; and the Nasdaq stock market pushed higher by 46.50 points, or 1.2%, to 3,817.98.

DDR adds

DDR's 1.75% convertibles due 2040 were quoted at 115.407 at the end of the day with the underlying shares up 39 cents, or 2.5%, to $16.10.

The bonds trade on about a 60% to 70% delta, a trader said.

"Somebody was selling them, but they are slowly creeping up higher," the trader said.

SL Green's 3% convertible due 2017 was heard at 121.25 bid, 122.25 offered versus an underlying share price of $89.60.

Mentioned in this article:

Archer-Daniels-Midland Co. NYSE: ADM

DDR Corp. NYSE: DDR

Morgans Hotel Group Co. Nasdaq: MHGC

SandRidge Energy Co. NYSE: SD

SandRidge Energy Co. preferred NYSE: SDRXP

SL Green Realty Corp. NYSE: SLG

Teleflex Inc. NYSE: TFX

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