Convertibles firm; Palo Alto expands after earnings; Restoration Hardware recoups a point

By Rebecca Melvin

New York, Feb. 26 – Convertibles firmed up in generally quiet trade on Friday as the market continued to regain its footing following a tough couple of weeks amid weakness in the energy sector and other areas.

“I’d say it’s been the last two or three days that things have gotten better,” a New York-based trader said.

“It’s been a tough month for convertibles for February,” the trader said, adding that it was difficult to pinpoint which areas were better or worse or how they compared to the broader markets.

“It really depends on what sector exposure you had. Some energy was good, some bad. No one really outperformed one way or the other,” he said.

Palo Alto Networks Inc. rose on an outright basis and bumped up about 0.25 point on a dollar-neutral, or swap, basis on Friday following positive earnings that the California-based cybersecurity company announced Thursday.

Restoration Hardware Holdings Inc.’s two series of 0% convertibles were better bid and recouped about half of the dollar-neutral loss that they had suffered on Thursday when the Corte Madera, Calif.-based specialty retailer pre-announced quarterly results that fell short of expectations.

Restoration Hardware “was down two-ish points and richened up a point today,” a trader said.

Elsewhere Colony Financial Inc.’s 3.875% convertibles traded at 88 early Friday, which was up about 0.5 point from the previous level after the Santa Monica, Calif.-based real estate investment and finance company posted results that were better than expected.

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