Convertibles activity declines ahead of holiday; Micron ticking higher; Whiting paper up

By Stephanie N. Rotondo

Seattle, June 28 – The convertible bond market was subdued on Tuesday, with one trader opining that “it’s only going to get worse.”

He attributed the weak liquidity to it being a pre-holiday week, as Independence Day is right around the corner. The markets’ recent volatility and uncertainty surrounding the Brexit news was likely also playing a role.

But as the rest of the markets were showing signs of rebounding following two days of hefty losses, the convertibles space was also inching higher.

The typical go-go names like Tesla Motors Inc. and Illumina Inc. were trading on the active side. Tesla’s 1.25% convertible notes due 2021 added about a point, moving up to 82.

The equity underlying the bonds was also up, rising $3.24, or 1.63%, to $201.79.

Illumina’s convertibles were only slightly better on the day, however, and its stock was trending lower.

The 0.5% convertible notes due 2021 were pegged at just north of 99. The stock fell 47 cents to $135.01.

Micron edges up

Micron Technology Inc.’s paper was trading up, albeit inactively, according to a market source. The 3% convertible notes due 2043 were seen straddling 74, which was up from trades near 73.5.

The equity meantime rose 76 cents, or 6.21%, to $12.99.

The memory chip manufacturer is slated to release its latest quarterly results after the market closes on Thursday. The numbers are not expected to be stellar, given the company’s recent weak performance due to depressed DRAM prices. But analysts are projecting that guidance for the current quarter could show signs of improvement.

Whiting rises on CEO comments

Whiting Petroleum Corp.’s senior management said that the company’s liquidity was “very strong” at the JPMorgan Energy Equity Conference on Tuesday in New York.

Additionally, James J. Volker, president and chief executive officer, said a series of debt exchanges had “significantly” reduced outstanding debt and pushed maturities out until 2018.

“We’re very pleased with that – it brings our total amount [of outstanding debt] exchanged to about $1.5 billion,” Volker said. “I think those are great transactions to bring our debt levels down to areas in what I would say are a more appropriate level, given where oil and gas prices are today.”

The comments gave a boost to the equity as well as the convertible bonds.

The common stock improved by 52 cents, or 6.07%, to end at $9.08. The 1.25% convertible notes due 2020 closed in a 79 to 79.5 context, up 1.5 to 2 points on the day, according to a market source.

Mentioned in this article:

Illumina Inc. Nasdaq: ILMN

Micron Technology Inc. Nasdaq: MU

Tesla Motors Inc. Nasdaq: TSLA

Whiting Petroleum Corp. NYSE: WLL

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