Convertibles well bid, add 0.25 point across the board; SunEdison, Micron notes jump

By Rebecca Melvin

New York, Oct. 5 – U.S. convertibles were better bid on Monday as equities rallied.

Amid strength in the equity markets, the overall convertibles space lifted by about 0.25 point on a swap basis, making back some of the weakness from Friday, a New York-based convertibles trader said early Monday.

Many of the more liquid names were better, including Intel Corp., LinkedIn Corp.’s 0.5% convertibles and the SanDisk Corp. 1.5% convertibles. But there were no real themes.

SanDisk’s 1.5% convertibles due 2017 ended the session around 131.8, which was up about a point from Friday, while SanDisk shares were flat to lower, ending the day at $59.47, which was down 11 cents on the day.

LinkedIn’s 0.5% convertibles due 2019 were in the 99 ballpark, which was up a point or so on an outright basis, according to Trace data. LinkedIn shares gained $3.20, or 1.7%, to $192.41.

But FireEye Inc.’s convertible bonds were down about a point, changing hands at 88.7 during the session.

The convertibles of both SunEdison Inc. and Chesapeake Energy Corp., which were big drags on the space in August, were up in trade. SunEdison’s multiple convertible issues were up as much as 2 points as shares of the St. Peters, Mo.-based solar technology company popped following the company’s announcement of a proposed series of actions to align its businesses with current and future market opportunities and accelerate cash flow positive operations.

Meanwhile Micron Technology Inc. saw its stock and bonds surge after the Boise, Idaho-based chipmaker reported better-than-expected quarterly results. Micron’s 3% convertibles due 2043 jumped to about 90 from 85.9, which extended a 0.5 point rise on Friday, according to a market source. And Micron shares gained $1.66, or 10%, to $17.57.

For its fiscal fourth quarter, Micron reported earnings excluding one-time items of 37 cents per share, which was down from 82 cents per share in the year-earlier quarter; but the result was better than analysts had estimated.

Micron profit was lower by 15% to $3.6 billion due to continuing weakness in demand in the PC market. But the result was also better than expected.

Equities were up strongly. The S&P 500 stock index gained 35.69 points, or 1.8%, to 1,987.05. Oil prices gained, with the West Texas intermediate benchmark up 1.5% to $46.20 per barrel for November delivery.

SunEdison jumps

SunEdison’s 2.375% convertible notes due 2022 jumped nearly 4 points to 60, and SunEdison shares closed up 77 cents, or 9.3%, to $9.04.

While the shares popped, they still remain under $10.00 each after a steep slide through August from about $22.00.

Spurring Monday’s move was SunEdison’s release that it is going to focus on core, high profit-potential markets such as the United States, India, China and Latin America. It will also simplify its business structure by centralizing and consolidating operations following recent acquisitions.

SunEdison will hold an investor presentation early Wednesday.

The SunEdison 2.375% convertible notes due 2022 jumped to about 55 from 49, and the SunEdison 2.75% convertibles shot up to 82 from about 75.5.

The SunEdison 3.375% convertible notes due 2025 were also busy, adding more than 3 points to trade at 54.75.

Meanwhile the 2.375% convertible notes remained active, adding to nearly 60 from 56.25 or 56.50.

Mentioned in this article:

Chesapeake Energy Corp. NYSE: CHK

FireEye Inc. Nasdaq: FEYE

Intel Corp. Nasdaq: INTC

LinkedIn Corp. NYSE: LNKD

Micron Technology Inc. NYSE: MU

SanDisk Corp. Nasdaq: SNDK

SunEdison Inc. Nasdaq: SUNE

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