Morning Commentary: Convertibles secondary quiet as earnings roll in; Ford weakens

By Abigail W. Adams

Portland, Me., April 19 – It was another quiet morning in the convertibles secondary space on Wednesday as equity markets turned lower on the heels of the latest batch of earnings.

The Dow Jones industrial average was down 82 points, or 0.24%, the S&P 500 index was down 0.20%, the Nasdaq Composite index was off 0.32% and the Russell 2000 index was 0.41% lower shortly before 11 a.m. ET.

There was $67 million in reported convertibles trading volume about one hour after the opening bell with Duke Energy Corp.’s 4.125% convertible notes due 2026 (Baa2/BBB) accounting for about one-third of the activity.

The 4.125% notes were little changed in the heavy volume.

The notes were changing hands at 101.5 versus a stock price of $98.29 early in the session, according to a market source.

There was $20 million in reported volume.

Duke Energy’s stock was trading at $98.39, an increase of 1.01%, shortly before 11 a.m. ET.

While volume in the name was light, Ford Motor Co.’s 0% convertible notes due 2026 (Ba2/BB+) were among the biggest price movers with the notes lower outright on a heavy day for stock.

The notes fell 2 points outright with stock off 3% with the notes once again trading below par.

The 0% notes were seen at 98.5 early in the session.

There was $3 million in reported volume.

Ford’s stock was changing hands at $12.24, a decrease of 3.89%, shortly before 11 a.m. ET.

Wednesday marked a heavy day for auto makers with the sector under pressure ahead of Tesla Inc.’s earnings, which are scheduled for release after the market close.

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