Morning Commentary: Convertibles quiet early; Palo Alto, Jazz Pharmaceuticals down

By Abigail W. Adams

Portland, Me., June 15 – The primary and secondary convertible markets were quiet early Monday.

No deals launched and there was little on the tape as equities stood poised for an ugly session over growing concern about a resurgence of Covid-19 cases and a slow economic recovery.

“Nothing’s going on on the new issue front. That’s slowed things down a bit,” a source said.

There was $62 million in reported volume about one hour into Monday’s session, which was the lightest volume the secondary space had seen in a while, the source said.

Few names saw concentrated trading activity.

While volume was light, recent deals from Jazz Pharmaceuticals plc and Palo Alto Networks Inc. continued to struggle below par.

Jazz Pharmaceuticals’ 2% exchangeable notes due 2026 traded as low as 96.625 early Monday with stock down another 0.5%.

Jazz stock was changing hands at $104.14, a decrease of 0.52%, shortly before 11 a.m. ET.

The notes have traded below par since the sell-off in equities on June 11. They priced at par on June 9.

Palo Alto’s 0.375% convertible notes due 2025 also continued to trade below par.

The 0.375% notes were changing hands around 96.5 early Monday with stock flat.

There was $3 million in reported volume on the tape.

Palo Alto stock traded to a low of $217.48 early Monday but gained strength as the session progressed and was changing hands at $222.94, an increase of 0.49%, shortly before 11 a.m. ET.

The notes have largely struggled below par since hitting the aftermarket on June 4.

While the notes briefly popped above par early last week, they also got caught in last Thursday’s sell-off and sank back below, according to Trace data.

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