Morning Commentary: Convertible debt trades mixed post-Trump win; Peabody rises; Molina off

By Stephanie N. Rotondo

Seattle, Nov. 9 – Convertible bonds were trading mixed on Wednesday following Donald Trump’s win in the U.S. presidential election.

The Republican candidate’s victory came as a surprise, as most polls indicated that Democratic nominee Hillary Clinton was the front-runner.

“Stocks are bouncing around, but holding higher for the most part,” a trader noted.

Still, trading volume in the space continued to be thin.

A trader saw Peabody Energy Corp.’s 4.75% convertible junior subordinated debentures due 2066 moving up in the wake of the election results.

He pegged the paper in a 22 to 23 context at mid-morning, which compared to a range of 19 to 20 on Tuesday.

“Trump is going to help coal companies and clean energy is going to suffer,” a trader said, as the president-elect has made deregulation a cornerstone of his campaign.

The trader pointed out that Green Plains Inc., an ethanol production company, was seeing its stock trade off.

But the trader also commented that Trump will need to exercise caution when it comes to clean energy.

“He can’t drive them out of business, because that’s jobs lost,” he said. Trump has also staked his campaign on job creation, so “that’s one area he will have to be careful about.”

Green Plains’ 3.25% convertible notes due 2018 were not actively traded in the early midweek session.

Meanwhile, Molina Healthcare Inc.’s 1.125% convertible notes due 2020 dropped 11.5 points outright, a trader said, seeing the issue at 139.55.

The stock (NYSE: MOH) was also weaker, he said, placing the equity at $52.17.

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