Morning Commentary: Market trades quietly but firm; Weatherford exchangeable lower with oil

By Rebecca Melvin

New York, July 18 – The convertible bond market was trading quietly early Monday, but pricing was firm, as the summer slowdown in market activity remained in effect, a New York-based trader said.

There were no U.S. deal launches early Monday or last week, so the primary market has also been very quiet after a busy June.

“In general paper keeps getting better for a variety of reasons. We’ve hit another dead spot in financings. With Brexit, people don’t feel a [rate] hike is coming any time soon. Overall, there’s very little incentive to sell. So accounts might make a print here and there, but the market is extremely thin at this point,” the trader said.

Weatherford International Ltd.’s convertibles were down about a point at 116.4, according to Trace data, as shares of the international oilfield services company slipped a penny or two to about $6.00. The $1.1 billion of 5.875% exchangeables due 2021 debuted at the beginning of June and have been a staple of traders as the price for the exchangeables surged to as high as 120 to 122 and slipped back mostly in line with pricing in the crude oil market.

Crude oil for August delivery was down 99 cents, or 2.15%, in the early going to $44.96 per barrel.

Elsewhere, Qihoo 360 Technology Co. Ltd.’s convertibles were active. The Qihoo 1.75% convertibles due 2021 traded little changed at around 99.75, according to Trace data.

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