Morning Commentary: Convertible bonds slip with market; SunEdison trades; Chesapeake retreats

By Stephanie N. Rotondo

Phoenix, Oct. 1 – The convertible bond market was weakening in early Thursday trading, following the Dow Jones industrial average lower.

“The Dow just dropped 100 points, real fast,” a trader said, adding that the drop was because the market was “worried about Syria blowing up.”

“Like it hasn’t already,” he noted.

Russia began an airstrike campaign against those fighting against the nation’s president, Bashar al-Assad.

But as for the convertibles space, SunEdison Inc. continued to be widely traded, even amid muted volume, according to a trader.

“I see more of the paper getting quoted with a 50 handle,” he said. “The stock was higher, now it’s down a little bit.”

There hasn’t been any fresh news out on the solar energy company, but the name has been dragged down of late as investors worry about the company’s high debt.

Meanwhile, Chesapeake Energy Corp. said in a regulatory filing that it had secured an amendment on its senior revolving credit line that would, among other things, allow for the issuance of up to $2 billion in junior debt. The news was pushing “all the corporates” down, according to a trader.

He said there were “a bunch of sales” in the 2.5% convertible notes due 2037 at 85.25, which compared to levels with an 87 handle on Tuesday.

The equity was meantime down about 4% in early trading.

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