Morning Commentary: Ciena convertibles active post earnings; K2M quiet amid buyout

By Abigail W. Adams

Portland, Me., Aug. 30 – The convertibles secondary market was again quiet early Thursday with all eyes on the steady pipeline of deals expected in September.

There was about $33 million of bonds on the tape early in the session with several $1 million and odd-lot trades accounting for the activity.

Ciena Corp.’s soon-to-mature 3.75% convertible notes due Oct. 15, 2018 were in focus as the company’s stock broke out to a new 52-week high after an earnings beat.

The notes, which trade at parity, were moving in line with stock, a market source said. The 3.75% notes traded up to 156.5. Ciena stock was up more than 15% to $31.56 early in the session.

Ciena reported non-GAAP earnings per share of 48 cents for the third quarter, which beat analyst expectations of 36 cents per share.

K2M Group Holdings, Inc.’s 3% convertible notes due 2025 were not active in the secondary space as stock jumped more than 25% after the company announced it would be bought out by Stryker Corp.

No bonds were seen changing hands after the announcement, a market source said. The medical device company priced $75 million of the 3% convertible notes in mid-June.

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