Morning Commentary: NuVasive convertible notes in focus, up on swap in early trading

By Abigail W. Adams

Portland, Me., Feb. 21 – The convertibles secondary space saw a slow start to Friday’s session with activity surrounding the deals to price over the past week petering out.

While few names saw concentrated trading activity, NuVasive Inc.’s 2.25% convertible notes due 2021 were in focus as stock dropped following its fourth-quarter earnings report.

While the notes were down on an outright basis, they were expanding on a dollar-neutral, or hedged, basis, a source said.

The 2.25% convertible notes traded down about 4.5 points outright to 129.

However, they expanded about 1 point on a dollar-neutral basis on the move down, a market source said.

There was a good mix of swap and outright trading activity.

While the notes were active on Friday, “they don’t have a lot left to them,” another source said.

The notes become provisionally callable on March 20. However, stock is below the provisional call price.

NuVasive stock was down more than 6% following its fourth-quarter earnings report.

The shares were changing hands at $74.22, a decrease of 6.01%, shortly before 11 a.m. ET.

Stock was trading off despite a fourth-quarter earnings beat.

The San Diego, Calif.-based medical device company reported fourth-quarter earnings per share of 73 cents versus analyst expectations for earnings per share of 63 cents.

Revenue was $310.4 million versus analyst expectations for revenue of $304.93 million.

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