Yahoo better on swap ahead of earnings; DDR edges up dollar neutral; KEYW notes on tap

By Rebecca Melvin

New York, July 15 – Yahoo! Inc.’s 0% convertibles traded slightly better on a dollar-neutral, or hedged, basis on Wednesday ahead of the company’s second-quarter earnings report posted after the market close.

Yahoo missed estimates amid lower advertising revenue, but the internet company also said it has amended its agreement with Alibaba Group Holding Ltd. and will have to sell fewer Alibaba shares than previously expected when the Chinese e-commerce company goes public. Yahoo owns about 23% of Alibaba shares, and the ability to hold on to more shares means it stands to benefit as Alibaba grows.

Intel Corp.’s sister convertibles traded actively ahead of its earnings report, which was also released after the market close.

Intel’s convertibles have been trading very actively on a regular basis.

DDR Corp. traded actively and added on a hedged basis amid better buyers. But Cobalt International Energy Inc. was under pressure amid big sellers in the older issue. Meanwhile, the newer Cobalt issue contracted about 0.5 point on a hedged basis, market sources said.

In the primary market, KEYW Holding Corp. launched an overnight deal of $125 million of five-year convertible senior notes after the market close.

Overall, market players said there was not much of a theme to Tuesday’s trading and that so far this week, the news that has pushed names into trade has not been of sufficient magnitude “to move the needle.”

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