Morning Commentary: Convertible secondary market off to a crawl; Sea’s new convertible active

By Abigail W. Adams

Portland, Me., June 19 – The convertible secondary space was off to a crawl on Tuesday with $50 million on the tape early in the session.

While several names have traded, they have been in small amounts with the market in wait-and-see mode, a market source said.

“With the equity move and the treasury move, people are waiting to see if it rolls into credit or not,” the source said.

Tuesday opened with the Dow Jones industrial average down 329 points and the yield on the 10-year Treasury note yield down to 2.883%.

“People are trying to figure out if this is a bond opportunity,” the source said of market conditions early Tuesday.

While the secondary market was quiet with trading activity muted, Sea Ltd.’s recently priced 2.25% convertible notes due 2023 were among the names traded as the company’s American Depositary Shares dropped.

The notes were down 2 points outright to trade at 102 with the company’s shares down 60 cents to 70 cents.

While the 2.25% notes backed off their initial 3 points dollar-neutral expansion when the notes first hit the market on June 14, they are still expanded 2 points dollar neutral from pricing, a market source said.

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