Morning Commentary: Microchip convertible issues trading little changed as market tapers off

By Rebecca Melvin

New York, Feb. 24 – Several Microchip Technology Inc. convertibles were trading little changed in the U.S. market on Friday, as trading volumes overall wound down for the week, according to Trace data.

Three sister issues of Microchip were off fractionally on an outright basis, including the issuer’s new $2.3 billion in two deals that priced earlier this month. At late morning, the new Microchip 1.625% convertibles due 2027 were down 0.20 point to 100.898; the new Microchip 2.25% convertibles due 2037 were off 0.31 point at 101.143; and the old Microchip 1.625% convertibles due 2025 were off 0.13 point at 142.168.

Shares of the Chandler, Ariz.-based manufacturer of microcontroller, memory and analog semiconductors were down 10 cents, or 0.14%, at $72.61.

“The [convertible] market is still trying to dig its way out of all the paper,” a New York-based trader said of the two new Microchip deals, which were upsized from an originally talked $1.5 billion.

The deals were detrimental to holders of Microchip paper, the trader said. The Microchip 1.625% convertibles of 2025, or the “olds,” fell 2 points when the new deals priced two weeks ago, and since then they have slipped another 0.5 point, he said. The new paper “crushed the [Microchip] market.”

Otherwise, trading volumes in the convertible space were light as a risk-off tone hit the broader markets and the holiday-shortened trading week wound down. U.S. financial markets were closed on Monday in observance of the Presidents Day holiday.

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