Morning Commentary: Convertibles quiet; Twitter trades a little weaker; Intel, Brocade in focus

By Rebecca Melvin

New York, July 13 – U.S. convertibles were mostly quiet early Monday despite higher shares that were cheered by news of a Greek bailout deal that promises to provide additional aid and keep that nation in the euro zone in exchange for austerity measures.

The Greek deal was described as “relevant” for the convertibles market but not driving daily trades, a New York-based trader said.

Technology names looked to be something of a focus for Monday’s market in convertibles.

Twitter Inc.’s dual convertible bonds were seen a little lower with bonds in general. Those bonds were quoted at 89.5 versus an underlying share price of $35.80. A New York-based trader said both bonds were at the same level, and he saw them a little lower against shares that were up nearly 3% on the day, but he wasn’t trading them.

“It’s very quiet; people are on vacation,” he said.

Most of the volume in Intel Corp. switched to the company’s 2.95% convertibles due 2035, which were seen on the Trace tape at 118.45, or up 0.8 point. Last week, much of the volume in Intel was in its 3.25% convertibles due 2039. Shares of the Santa Clara, Calif.-based chipmaker were up 39 cents, or 1.3%, at $29.55.

Brocade Communications Systems Inc. was under pressure early Monday after RBC Capital Markets downgraded shares of the San Jose, Calif.-based storage area networking company to “sector perform” from “outperform.”

A New York-based trader said he saw one trade in the Brocade 1.375% convertibles due 2020. They were on Trace at 101.14, which was about flat on an outright basis. The Brocade shares were down almost 5% at $10.79.

Equities moved higher on Monday. The euro zone and Greece leaders reached a deal to provide €86 billion in fresh aid as long as Greece implements austerity measures in the coming days. As part of his campaign, Greece’s prime minister, Alexis Tsipras, had promised to scrap the bailout.

U.S. equity indices were up about 1%. The Nasdaq composite stock market was up 61 points, or 1.2%, at 5,058.60.

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