Morning Commentary: Investment-grade convertible notes active in early trading

By Abigail W. Adams

Portland, Me., July 14 – The convertibles secondary space stood poised to round out a strong week on firm footing despite a mixed open for equity markets.

The strong rally in equities showed signs of waning with indexes mixed after logging strong weekly gains.

The Dow Jones industrial average was up 77 points, or 0.22%, the S&P 500 index was up 0.07%, the Nasdaq Composite index was up 0.18% and the Russell 2000 index was down 1.36% shortly before 11 a.m. ET.

There was $55 million in reported convertibles trading volume about one hour into the session with investment-grade convertible notes continuing to dominate the tape.

Welltower Inc.’s 2.75% convertible notes due 2028 (Baa1/BBB+) and CMS Energy Corp.’s 3.375% convertible notes due 2028 (Baa2) were the most actively traded issues in the secondary space.

The notes were lower outright but moving largely in line with equity, a source said.

Welltower’s 2.75% convertible notes were down about 0.5 point outright.

They were changing hands at 100.875 early in the session.

There was $5 million in reported volume.

Welltower’s stock was seen at $79.62, a decrease of 1.57%, shortly before 11 a.m. ET.

CMS Energy’s 3.375% convertible notes due 2028 were off about 0.125 point outright.

The notes were trading just shy of par early in the session.

There was $5 million in reported volume.

CMS’ stock was changing hands at $60.61, a decrease of 0.35%, shortly before 11 a.m. ET.

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