Morning Commentary: Airline convertible bonds gain outright as oil futures drop

By Abigail W. Adams

Portland, Me., March 29 – There was an uptick of activity in the convertibles secondary space on Tuesday as equity markets roared at the open on optimism surrounding a Russian and Ukrainian cease-fire.

The Dow Jones industrial average was up 248 points, or 0.71%, the S&P 500 index was up 0.70%, the Nasdaq Composite was up 1.09%, and the Russell 2000 index was up 1.89% shortly before 11 a.m. ET.

There was $107 million in reported convertibles trading volume about one hour into the session.

The convertible notes of airlines were active and gaining alongside stock as oil futures continued to come in on the prospects of an end to hostilities.

American Airlines Group Inc.’s 6.5% convertible notes due 2025 rose 3 points outright with stock up more than 6%.

They were changing hands at 135.875 versus a stock price of $18.01 early Tuesday.

There was $8 million in reported volume.

American’s stock was changing hands at $18.39, an increase of 6.30%, shortly before 11 a.m. ET.

Southwest Airlines Co.’s 1.25% convertibles due 2025 (Baa1/BBB) gained 1.25 points outright with stock up more than 3%.

The 1.25% convertible notes were changing hands at 136.5 versus a stock price of $45.54 early in the session.

There was $6 million in reported volume.

Southwest’s stock was changing hands at $46.10, an increase of 3.78%, shortly before 11 a.m. ET.

Crude oil futures continued to come in early Tuesday with WTI crude trading at $103.10, a decrease of $2.86 or 2.71%, and Brent crude trading at $106.44, a decrease of $3.10 or 2.83%, early Tuesday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.