Intel, Priceline, Liberty/Charter paper muted as equities waver; markets eye Yellen speech

By Rebecca Melvin

New York, Aug. 25 – Convertibles continued to trade quietly on Thursday as the dog days of August wore on, with a week to go before Sept. 1. More vigorous market activity is expected to resume with the unofficial end of summer, which is the week after next following the U.S. Labor Day holiday.

Also contributing to Thursday’s quiet tone was a pause in the broader markets ahead of Federal Reserve chairman Janet Yellen’s speech slated for Friday at the conclusion of the economic summit in Jackson Hole, Wyo., that has been underway this week.

Yellen is unlikely to provide a strong signal regarding whether an interest rate hike is coming next month or not. But if she does indicate that the Sept. 20-21 meeting could bring a rate increase, the markets could be rattled. It is more likely that given continuing low inflation and mixed economic data, policy makers will put off a potential rate increase for its December meeting.

On Thursday, there was muted trading of Intel Corp., Priceline Group Inc. and Liberty Interactive LLC’s debentures exchangeable into shares of Charter Communications Inc., as the underlying shares of those issues traded fractionally higher, a market source said.

The Liberty debenture is seeing some activity as “it takes a little time for people who weren’t involved to get their position where they want them to be,” a New York-based trader said.

ON Semiconductor Corp.’s 1% convertibles traded within their recent range on Thursday but toward the low end of that range despite an increase in the common shares that underlie the bond. The ON Semiconductor convertible, which is due 2020, traded at 96.68 and 96.625, according to Trace data, compared to marks at 97 on Wednesday. Meanwhile, the ON Semiconductor shares were up 32 cents, or 2.9%, at $11.025.

ON Semiconductor has won U.S. antitrust approval to buy Fairfield Semiconductor International on condition that it sells its automotive ignition business Ignition IGBT, the U.S. Federal Trade Commission said Thursday.

Without the sale of that business the merged company would have controlled more than 60% of the market for insulated-gate bipolar transistors, used in automotive engines, according to an FTC statement.

The primary market remained muted this week after an unusually busy few weeks in the early part of the month for the new issue market. For August so far, there have been $7.59 billion in 13 deals, which is up from $1.09 billion in three deals for all of August in 2015, according to Prospect News’ data.

The month’s notable new deals have included the two Liberty deals. In addition to the $750 million of debentures exchangeable into shares of Charter, this month Liberty Media Corp. priced $444.6 million of debentures exchangeable into shares of Time Warner Inc.

DISH Network Corp.’s $3 billion of 3.375% convertible notes, which priced in early August, was a definite coup for the market, and Dominion Resources Inc. priced a large deal of $1.25 billion of 6.75% equity units.

Back in established issues, Intel’s 3.25% convertibles due 2039 changed hands little changed at 172.375.

Mentioned in this article:

Charter Communications Inc. Nasdaq: CHTR

DISH Network Corp. Nasdaq: DISH

Dominion Resources Inc. NYSE: D

Intel Corp. Nasdaq: INTC

ON Semiconductor Corp. Nasdaq: ON

Priceline Group Inc. Nasdaq: PCLN

Time Warner Inc. NYSE: TWX

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