GT Advanced bonds pop on Apple pact; Yahoo! gains on hedge after earnings; Red Hat slips

By Rebecca Melvin

New York, Oct. 22 – Convertibles remained firm on Wednesday as equities swung lower after a higher start, market players said.

“The market’s going to settle in here, and I think guys are getting ready to put money to work,” a New York-based sellsider said, noting that many convertibles players are flat for the year so far and eyeing year-end.

Trading volume was elevated, but the market didn’t feel as busy as the volume figures suggested, the sellsider said.

GT Advanced Technologies Inc. was the name of the day. That company’s two convertible bond issues popped – marking the second straight day of gains and more than doubling the securities’ pricing earlier this week.

News that the bankrupt Merrimack, N.H.-based solar and LED equipment company inked an agreement with Apple Inc. improves the prospects for recovery for bond investors.

Elsewhere, Yahoo! Inc.’s 0% convertibles due 2018 traded up on an outright basis and expanded about 0.125 point on a dollar-neutral basis after the internet company posted earnings that were better than expected. Yahoo! shares gained 4.5%.

Red Hat Inc.’s 0.25% convertibles due 2019 slipped 0.25 point on a hedged basis early Wednesday, a New York-based trader said.

Tesla Motors Inc.’s 1.25% convertibles were active but unchanged.

The Tesla bonds “are up a tiny bit in the last week,” a sellsider said. “But it’s a name that’s likely to be creeping up in the next couple of weeks.”

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