Morning Commentary: Enphase convertible notes continue to gain; DexCom declines

By Abigail W. Adams

Portland, Me., July 29 – The convertibles secondary space stood poised to close July on firm footing with returns positive for the month after a brutal first half of the year.

Equity indexes extended their gains on Friday with markets surging in July as the market repriced its expectations for the Federal Reserve rate hike schedule and the recession scenarios.

The Dow Jones industrial average was up 71 points, or 0.23%, the S&P 500 index was up 0.73%, the Nasdaq Composite was up 1.08% and the Russell 2000 index was up 0.23% shortly before 11 a.m. ET.

However, volume remained thin in the secondary space as earnings-related volatility continued to drive trading activity.

Enphase Energy Inc.’s 0% convertible notes due 2026 continued their upward momentum with the notes making strong outright and dollar-neutral gains since reporting earnings.

The notes rose another 3 points outright as stock extended their gains.

The notes were changing hands at 119.125 versus a stock price of $280.10 early in the session.

There was $3.5 million in reported volume with the issue the most actively traded early in the session.

Enphase’s stock was trading at $278.75, an increase of 1.67%, shortly before 11 a.m. ET.

DexCom Inc.’s deep-in-the-money, short-duration 0.75% convertible notes due Dec. 1, 2023 were also active with the notes sinking alongside stock after an earnings disappointment.

The 0.75% notes were seen at 200.875 versus a stock price of $79.60 early in the session.

There was $3 million in reported volume.

DexCom’s stock was changing hands at $83, a decrease of 4.59%.

The medical device company posted disappointing numbers with earnings of 17 cents versus expectations for 19 cents and revenue of $696.20 million versus expectations for revenue of $708.61 million.

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