Morning Commentary: Sea convertible notes in focus on quiet morning

By Abigail W. Adams

Portland, Me., Sept. 20 – It was a slow start to the week in the convertibles secondary space with many on the sidelines as equities launched the day deep in the red.

The Dow Jones industrial average was down 493 points, or 1.45%, the S&P 500 index was down 1.62%, the Nasdaq Composite was down 2.08% and the Russell 2000 index was down 2.3% shortly before 11 a.m. ET.

Fear of contagion from a default on China’s Evergrande Group’s debt and an upcoming Federal Reserve meeting were weighing on risk sentiment early Monday.

However, early week sell-offs tend to be overdone, a source said, and many were waiting on the sidelines to make a move.

There was $62 million in reported convertibles trading volume a little over one hour into Monday’s session.

However, Sea Ltd.’s 0.25% convertible notes due 2026 was the only issue to see concentrated trading activity.

The 0.25% convertible notes were changing hands at 102.875 versus an equity price of $335.10 early in the session.

There was about $9 million in reported trading volume.

Sea’s American Depositary Shares were changing hands at $327.80, a decrease of 3.53%, shortly before 11 a.m. ET.

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