Morning Commentary: Convertibles under pressure; Hornbeck comes in on hedge; Twitter, Qihoo active

By Rebecca Melvin

New York, Sept. 29 – Convertibles remained under pressure early Monday as lower stocks added to worries of rising rates that have caused smaller-coupon convertibles to adjust lower in recent weeks, market sources said.

In addition there appeared to be some trimming ahead of month end Tuesday.

Hornbeck Offshore Services Inc.’s convertibles extended losses on Monday, trading below par on an outright basis and coming in on a dollar-neutral, or hedged, basis.

Hornbeck’s 1.5% convertibles due 2019 were quoted at 99.125 versus an underlying share price of $34.10. That was 0.5 point lower on a dollar-neutral basis than on Friday, a New York-based trader said.

Shares of the Covington, La.-based provider of offshore supply vessels, which slid last week, were lower again on Monday as oil and oil services companies have been hit by recent weakness in crude.

Twitter Inc.’s tranches were lower with lower shares. Against a $51.60 share price, which was down 0.6%, the Twitter 0.25% convertibles due 2019 were seen down 0.3 point at 97.6 and the Twitter 1% convertibles due 2021 were seen at 98.1, which was down 0.8%.

Qihoo 360 Technology Co. Ltd.’s older 2.5% convertibles traded down about 0.7 point to 100.9, according to Trace data. Meanwhile, the Qihoo 0.5% convertibles of 2020 were down 1.6 points at 90.24.

Shares of the China-based provider of PC and mobile internet security products were down $1.94, or 2.7%, at $70.44 in early trade on Monday.

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