Satellite issues are stars of convert market
By ConvertBond.com, CBS MarketWatch
Last Update: 1:54 PM ET Jun 24, 1999
NewsWatch
NEW YORK (CBS.MW) -- The U.S. convertible securities market was
led higher by satellite services companies on Wednesday.
Leading on the upside were converts from Orbital Sciences Corp (ORB:
news, msgs),
Globalstar Telecommunications (GSTRF: news, msgs) and Beyond.com
(BYND: news, msgs).
Orbital Sciences converts carrying a 5 percent
coupon with a 2002 maturity was a very active
name. The issue closed at the 110 3/8 to 110 7/8
level, up sharply from Monday's 104 to 104 1/2
level. The bond was north of 160 this January only
to touch the 90 1/2 to 91 level by April. The bond
is registered and offers a current yield of 4.5
percent, which is 450 basis points more that the
non-dividend-paying common stock.
The ConvertBond.com model suggests that with a
25 percent upside move in Orbital's common
stock, the convert will be 15 percent higher (not
counting income). On the other hand, with a 25
percent downside move, the convert would fall only
13 percent. The issue is callable at 102 in 2000.
The Globalstar $4.00 convertible preferred due in
2011 closed higher at the 50 1/2 to 51 1/4 level.
This new issue from January was underwritten by
Bear Stearns at an offering price of 50. By late
March, it traded as low as the 38 1/4 to 39 level and by late May it
recovered to reach its year high of 57 1/2 to 58. The offering is rated
"Caa2" by Moody's Investors Service and "CC" by Standard & Poor's.
The Beyond.com 7.25 percent of 2003 was a very active name in the
convert market, closing at a startling level of 191 7/8 to 192 7/8 level.
That is up from a 130 to 131 level last week and a 111 to 112 level from
June 3 this month. Since its initial offering at par (100) through CS First
Boston in November 1998, the issue has been as high as 193 to 194 in
late April 1999. This bond still offers a 3.8 percent current yield even at
these levels.
ConvertBond.com provides convertible bond commentary for CBS
MarketWatch.
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