Morning Commentary: Etsy convertible notes in focus on quiet morning

By Abigail W. Adams

Portland, Me., June 30 – The convertibles secondary space saw another quiet morning with trading volume light as accounts prepared to close their books on the second quarter.

Equity benchmarks were largely flat early Wednesday with the Dow Jones industrial average and the S&P 500 index positive by a nominal amount while the Nasdaq Composite dipped into negative territory.

There was $63 million in reported volume a little over one hour into the session.

Etsy Inc.’s 0.25% convertible notes due 2028 remained in focus.

While the notes were little changed early Wednesday, they have seen a solid run on an outright and dollar-neutral basis over the past week.

The 0.25% notes continued to trade on a 109-handle.

They were changing hands at 109.5 versus a stock price of $203.80 early in the session.

There was more than $7 million on the tape.

Etsy’s stock was changing hands at $203.71, an increase of 0.58%, shortly before 11 a.m. ET.

The notes have gained more than 5 points outright and expanded about 0.375 point dollar-neutral over the past week, according to a market source.

The market hedge for the notes is 78%, a source said.

Etsy’s stock surged on Monday after the Brooklyn, N.Y.-based handmade and vintage item e-commerce company announced it was acquiring Elo7, a Brazilian e-commerce site, for $217 million.

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