AXA bonds see high demand; Nabors convertible preferreds expand; Hope drops below par

By Abigail W. Adams

Portland, Me., May 11 – The convertibles secondary market ended the week as it began – quietly. Thursday’s flurry of trading activity surrounding new paper tempered on Friday with only $200 million of bonds seen on the tape mid-afternoon.

The new mandatory convertible paper that hit the secondary market on Thursday continued to climb in secondary trading.

AXA SA’s 7.25% three-year bonds mandatorily exchangeable for AXA Equitable Holdings, Inc. stock shot up another 4 points on an outright basis to trade at 108.

While there are plenty of buyers looking for the paper, there are few sellers willing to part with it, a market source said.

Nabors Industries Ltd.’s 6% three-year $50-par series A mandatory convertible preferred shares continued their expansion on Friday with the preferred shares seen up 1 point on a dollar-neutral, or hedged, basis, a market source said.

EZCorp Inc.’s new 2.375% convertible notes due 2025 continued to improve with the notes seen up about 0.5 point outright to trade at 101.

The notes have expanded about 1.375 points dollar neutral since hitting the market on Thursday.

While the three deals that made their market debut on Wednesday put in strong secondary performances, Hope Bancorp Inc.’s newly priced 2% convertible notes due 2038 were seen below par on Friday.

DISH Network Corp.’s convertible notes continued their contraction on Friday with the notes “down significantly” on a dollar-neutral basis since April, a market source said.

Elusive AXA

There are still plenty of buyers looking for AXA’s 7.25% three-year bonds mandatorily exchangeable for AXA Equitable Holdings stock. However, there are few sellers, a market source said.

“We keep seeing buyers, but it’s hard to find,” the source said. “Anyone who’s got it is holding it.”

The 7.25% bonds shot up another 4 points on Friday to 108 after trading up to 104 on their Thursday debut.

AXA Equitable Holdings stock also improved on Friday, closing the day at $21.39, an increase of $1.05, or 5.16%.

AXA priced $750 million of the 7.25% bonds after the market close on Wednesday alongside AXA Equitable Holdings’ closely watched IPO.

While the IPO missed its target of $3.5 billion, it was still the largest IPO of the year to date, raising about $2.75 billion.

The mandatory exchangeable bonds, which were heavily allocated to outright accounts, were outperforming the equity, a market source said.

The notes have not seen much hedging activity thus far, but that may change once the IPO settles, another source said.

While some were able to get an early borrow from the underwriters, “not everyone could borrow the stock right away,” the source said.

Nabors expands

Nabors Industries’ 6% three-year $50-par series A mandatory convertible preferred shares continued to see gains on an outright and dollar-neutral basis on Friday.

“It is outperforming,” a market source said.

The convertible preferred shares were up 1 point dollar neutral early Friday, the source said.

The preferred shares traded as high as $53.50 on Friday before closing the day at $52.70, an increase of 1.35%.

Nabors common stock closed Friday at $7.93, an increase of 1 cent, or 0.14%.

Trading of the preferred shares also tempered on Friday with 474,100 shares in play versus their market debut on Thursday when 2.9 million shares traded.

Nabors Industries priced $250 million, or 5 million shares, of the convertible preferreds after the market close on Wednesday.

EZCorp expands

While trading activity was muted, EZCorp’s latest issue of convertible notes also improved on an outright and dollar-neutral basis on Friday.

The 2.375% convertible notes due 2025 were trading up to 101 mid-afternoon Friday with stock largely flat at $13.10.

The notes were up again slightly dollar neutral after about a 1.125 point expansion on their market debut on Thursday.

EZCorp priced an upsized $150 million offering of the seven-year convertible notes prior to the market open on Thursday.

Hope below par

While the three deals that hit the market on Thursday were performing well, Hope Bancorp’s 2% convertible notes due 2038 were seen below par on Friday.

The notes were down to 99.5 at mid-afternoon Friday, a market source said. Hope Bancorp stock closed the day at $18.13, a decrease of 0.22%.

“They never really got a bid out of the box,” a market source said.

Hope priced $200 million of the 2% convertible notes after the market close on Tuesday. The notes were trading between 100 and 100.5 on their market debut Wednesday and were seen slightly contracted dollar neutral.

DISH notes soft

DISH’s convertible notes continued to weaken on Friday on both an outright and dollar-neutral basis.

The company’s 3.375% convertible notes due 2026 were down 1 point outright to trade around 86.5 on Friday. The issuer’s 2.375% convertible notes due 2024 were seen down to 81.5.

The notes were contracted another 0.25 point to 0.5 point on a dollar-neutral basis on Friday. The notes have seen significant losses on a dollar-neutral basis since April, a market source said.

DISH’s stock closed Friday at $31.20, a decrease of 1.83%.

The company’s stock, convertible and high-yield bonds have all been under pressure this past week.

DISH’s stock and bonds traded off on Tuesday on news that DISH is still far from securing a partner for its planned wireless network.

DISH chairman Charlie Ergen gave an update on DISH’s progress toward launching a wireless network on its first-quarter earnings report conference call, which has been key to its long-term strategy.

DISH also had a slight earnings miss with earnings per share of 70 cents versus analyst expectations for earnings per share of 72 cents.

Mentioned in this article:

AXA Equitable Holdings, Inc. NYSE: EQH

DISH Network Corp. Nasdaq: DISH

EZCorp Inc. Nasdaq: EZPW

Hope Bancorp Inc. Nasdaq: HOPE

Nabors Industries Ltd. NYSE: NBR

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