Dycom improves on swap after earnings; SunEdison surges; Newmont Mining flat to lower

By Rebecca Melvin

New York, Nov. 24 – Dycom Industries Inc. improved on a swap basis in the convertibles market on Tuesday after the Florida-based specialty contracting company reported better-than-expected quarterly results.

The Dycom 0.75% convertibles were seen to have improved about 0.25 point on swap, as the bond’s underlying shares swung from gains to losses and back again following positive results, a New York-based trader said.

A handful of other corporate earnings reports were released on Tuesday, including those of Post Holdings Inc. and Ship Finance International Ltd. But there was not a lot of trading activity in the convertibles of those companies.

“People want to go home for Thanksgiving; they want to take a break,” a trader said, adding that it’s going “to be a rough couple of weeks” in the secondary market due to light liquidity.

Financial markets will be closed on Thursday for Thanksgiving.

Meanwhile SunEdison Inc., the struggling solar technology company which has seen its bonds drag into pricing with a 20 handle, announced a few positive developments that caused its stock to pop 37% on top of a 19% gain on Monday. After all that, shares were still only $4.12 to end the session. But the gains bode well for both the convertibles and equity of the beleaguered company.

Driving the gains was news that the company repaid most of the $410 million margin loan that had contributed to the collapse of its securities and also that it has inked new solar projects in India and with Los Angeles County.

The SunEdison convertibles didn’t appear to have caught up with the gains in the equities as of yet. The SunEdison 2% convertibles were seen last at 43, according to Trace data, even though they were indicated about 5 points higher given the move in shares.

The SunEdison 2.75% convertibles traded as high as 39, which was up from the mid 20s previously. But they were indicated higher at 43, according to a market source.

SunEdison’s 2.375% convertibles, which had dropped into the 20 range after having only been priced in May, were seen at 33.58, according to a market source. SunEdison shares jumped $1.12, or 37% to $4.12 on Tuesday.

Also on Tuesday, Newmont Mining Corp.’s 1.625% convertibles, which typically trade by appointment only, traded a little weaker on Tuesday, ending the session at 99 after having earlier traded at 99.25.

Gold prices and bond prices gained intraday amid investor concerns about geopolitical developments after news that Turkey downed a Russian jet on the Syrian border.

Newmont’s 1.625% convertibles due 2017 traded as a bit of a yield play, a New York-based trader noted. They traded at about 99.25 early in the day, which was within their previous range, according to Trace data. Later they were at 99. Shares of the Denver-based gold and copper mining company bounced back about 2.5% after weakness in previous sessions.

On Monday, U.S. convertibles started off the holiday-shortened week on a softer note as weakness in energy and other sectors like solar was seen spilling over into the broader convertibles market, and as convertibles investors were focused on reducing risk and trimming their portfolios.

Post Holding’s 2.5% perpetual convertible preferred shares were indicated up at 126.19 from 119.19, and the Post 3.75% perpetual convertible preferreds were seen at 144.15, which was up at 136 previously, according to a market source. Shares of the St. Louis-based breakfast cereal maker gained $4.12, or 6.7%, to $66.11.

Dycom expands 0.25 point

Dycom’s 0.75% convertible senior notes due 2021 traded at 110.25 bid, 110.75 offered on Tuesday, which was seen 0.25 point better on a swap basis versus shares of the Palm Beach Gardens, Fla.-based specialty contracting services provider, which ranged from as high as $90.82 to as low at $79.31, a New York-based trader said.

Shares opened higher and slid into negative territory before recovering gains in afternoon action. The move corresponded generally to moves in the broader markets, which were weak in the early going amid worries over potential escalation of military action the Middle East after Turkey took down a Russian war plane. Shares ended the session up $2.55, or nearly 3%, at $88.56.

Dycom earned $42 million, $1.24 per share, for the quarter, compared to income of $20.8 million, or 59 cents per share for the year-earlier quarter. Revenue rose 29% to $659.3 million. Analysts were expecting the company to earn $1.01 a share on revenue of $625.6 million.

Looking ahead, Dycom said it expects to earn between 52 cents and 60 cents per share for its fiscal second quarter. That was significantly higher than the 39-cent per share consensus estimate. The company said revenue for the current quarter will come in at $530 million to $550 million, which is better than the $528 million analysts were expecting.

Mentioned in this article:

Dycom Industries Inc. NYSE: DY

Newmont Mining Corp. NYSE: NEM

Post Holdings Inc. Nasdaq: POST

Ship Finance International Ltd. NYSE: SFL

SunEdison Inc. Nasdaq: SUNE

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