Morning Commentary: Market waits on Bristow and Fed, Trinity and Finisar make early gains

By Abigail W. Adams

Portland, Me., Dec. 13 – The Federal Reserve will be the focus of financial markets Wednesday as current chairman Janet Yellen gives her final press conference at 2 p.m. ET.

She is expected to announce the third interest rate increase of the year, which would bring the effective Federal Funds rate to its highest point since 2008.

With the recent report on inflation, all eyes will be on the Federal Reserve’s “Dot Plot” for interest rates in 2018 and beyond.

While energy prices caused a slight uptick in U.S. inflation in November, inflation rates with food and energy excluded slowed with the annual core Consumer Price Index increase 1.7%, as compared to 1.8% in October.

With inflation contained, market sources foresee the Federal Reserve’s policy of slow and steady rate increases continuing.

While the interest rate increases over the past year have not been the catalyst for convertibles that some market sources had hoped for, there has been a meaningful uptick in new deals with more coming before the year is through.

Bristow Group Inc. plans to price $125 million in convertible notes due 2023 after the market close on Wednesday with price talk for a coupon of 4.25% to 4.75% and an initial conversion premium of 22.5% to 27.5%, according to a market source.

Barclays Capital Inc. and Credit Suisse Securities LLC are joint bookrunners for the registered sale, according to a company release. The deal carries an $18.75 million greenshoe.

After heavy trading Tuesday, Trinity Industries Inc. 3.875% convertible notes due 2036 were off to an early start in Wednesday’s session gaining 2 points to trade at 158.62 shortly after the bell.

Trinity stock surpassed its 52-week high in early trading gaining 1.71% to trade at $37.51.

The 3.875% convertible notes made a 4 point gain on Tuesday after the company, which provides products and services to the industrial, energy, transportation and construction sector, announced plans to spin off its infrastructure business.

Moody’s has placed the convertible notes on review for downgrade as a result of the spin-off announcement.

Finisar Corp.’s 0.5% convertible notes due 2036 made large gains in early trading after Apple Inc. announced it would invest $390 million in the optical components maker to boost the company’s production of chips for Apple products.

The notes gained 6 points since Tuesday’s close to trade at 97.15, the highest the notes have traded since August, according to Trace data. The company’s stock skyrocketed in early trading reaching $24.57, an increase of 27.31%.

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