Morning Commentary: Zillow convertible notes trade down outright; primary market quiet

By Abigail W. Adams

Portland, Me., May 5 – The convertibles primary market remained closed early Wednesday with the first week of May poised to be another with no new issuance.

With no new paper entering the secondary space, earnings remained the driving force of trading activity.

Zillow Group Inc.’s 2.75% convertible notes due 2025 were in focus early Wednesday with the deep-in-the-money convertible notes trading off alongside stock following the online real estate marketplace’s earnings report.

The 2.75% convertible notes were changing hands at 190.25 about one hour after the opening bell.

However, the notes were largely moving in line with stock, a source said.

Zillow’s stock traded as low as $117.23 before rebounding and trading back up to $120.74, a decrease of 2.52%, shortly before 11 a.m. ET.

While Zillow beat on both the top and bottom lines in its first quarter earnings report, stock traded off on weak guidance.

Zillow reported earnings per share of 47 cents versus analyst expectations for earnings per share of 26 cents.

The company also reported revenue of $1.2 billion versus analyst expectations for revenue of $1.1 billion.

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