Morning Commentary: Convertible market quiet amid positive tone; Greenbrier up 3 points since issue

By Rebecca Melvin

New York, Feb. 6 – The convertible bond market got off to a slow start on Monday as the earnings season hit a lull, but the hybrid-bond space continues to see a positive tone overall as better new issuance levels in January and strong stock markets fuel confidence, a New York-based trader said.

The earnings season is “smack dab in the middle” for convertibles players so there wasn’t much driving trading action on that front early Monday, but there will be another flurry of reports before the season is over, the trader said.

Meanwhile, market participants remain bullish on equities going higher, and that is lending a bid to the convertibles market, as is new issuance, which is much better than last year at this time, the trader said.

Greenbrier Cos. Inc.’s 2.875% convertible senior notes due 2024, which priced last week with an initial conversion premium of 37.5%, was seen around 104.5 early Monday. That paper has expanded 3 points on a dollar-neutral basis since it debuted on Wednesday.

Greenbrier upsized the $250 million deal of senior notes from an initially talked deal size of $175 million.

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