DISH, Pioneer convertible notes active; ZTO gains outright; Workday maturity nears

By Abigail W. Adams

Portland, Me., Sept. 2 – Trading volumes remained muted in the convertibles secondary space on the Friday before Labor Day with equities volatile on the heels of the U.S. non-farm payroll report.

While the report still highlighted strength in the labor market with job growth greater than anticipated, the unemployment rate ticked higher and wage growth slowed.

The market appeared to dial back its expectations for the size of the Federal Reserve’s September rate hike early in the session with equity indexes up more than 1%.

However, equities reversed their reversal midway through the session with a risk-off sentiment pervading the market heading into the long weekend.

The Dow Jones industrial average closed Friday down 338 points, or 1.07%, the S&P 500 index closed down 1.07%, the Nasdaq Composite index closed down 1.31% and the Russell 2000 index closed down 0.86%.

There was $30 million in reported volume about one hour into the session and $200 million on the tape about one hour before the market close.

While equities were volatile, there was little movement in the names that did trade.

DISH Network Corp.’s 0% convertible notes due 2025 (B2/CCC) topped the volume charts on Friday although with little movement in price.

Pioneer Natural Resources Co.’s deep-in-the-money 0.25% convertible notes due 2025 were also active following a dividend payment and conversion rate adjustment.

ZTO Express’ recently priced 1.5% convertible notes due 2027 continued to add to their outright gains although the notes remained flat dollar-neutral.

Workday Inc.’s 0.25% convertible notes due Oct. 22, 2022 saw some action early in the session with the soon-to-mature notes in their averaging period.

Volume movers

DISH’s 0% convertible notes due 2025 and Pioneer Natural Resources’ deep-in-the-money 0.25% convertible notes due 2025 were active on an otherwise quiet day in the convertibles secondary space although with little movement in price.

DISH’s 0% convertible notes due 2025 were changing hands at 71.5 versus a stock price of $17 in the late afternoon.

The yield on the notes was 10˝%.

There was $11 million in reported volume.

DISH’s stock traded to a low of $16.78 and a high of $18.14 before closing the day at $17.01, a decrease of 4.49%.

While DISH’s stock was under pressure alongside broader markets heading into the close, the company’s credit improved, a source said.

Pioneer Natural Resources’ deep-in-the-money 0.25% convertible notes due 2025 were also among the top traded issues of Friday’s session.

The notes were seen at 246.5 versus a stock price of $242.71 in the late afternoon.

There was $10 million in reported volume.

Pioneer’s stock traded to a high of $246.71 and a low of $240.32 before closing the day at $241.76, an increase of 1.06%.

The notes were active after Pioneer announced a large dividend increase for the third quarter. Pioneer announced it will pay a dividend of $8.57 versus its prior dividend of $7.38.

The dividend payment triggered a conversion rate adjustment for the convertible notes, a source said.

ZTO adds to gains

ZTO’s 1.5% convertible notes due 2027 continued to add to their outright gains although the notes remained flat to contracted dollar-neutral, sources said.

The 1.5% notes traded up to 103.75 in the late afternoon.

There was $9.5 million in reported volume.

ZTO’s American Depositary Shares traded to a high of $26.96 and a low of $26.15 before closing the day at $26.33, a decrease of 0.79%.

The 1.5% notes, which priced at par on Aug. 24, was the last deal to clear the primary market.

Underwriters recently exercised the greenshoe in full, lifting the total size of the issue to $1 billion.

The convertible notes hit the aftermarket just as China and the United States reached an agreement over auditing that prevented hundreds of China-based companies from being delisted.

While the notes have added outright since pricing, they have underperformed on swap, sources said.

Workday matures

Workday’s soon-to-mature 0.25% convertible notes due Oct. 22, 2022 saw a round of early morning trades although activity in the issue waned as the session progressed.

The 0.25% notes gained about 0.75 point outright with stock up more than 1.5% early in the session.

They were trading at 109.875.

However, the notes were down 0.5 point outright with stock off more than 1.5% heading into the market close.

The convertibles were changing hands at 108.625 versus a stock price of $157.94 in the late afternoon.

The notes were changing hands around parity.

“Nothing too exciting there,” a source said.

There was $5 million in reported volume.

Workday’s shares traded to a high of $164.24 and a low of $157.43 before closing the day at $158.54, a decrease of 1.58%.

Mentioned in this article:

DISH Network Corp. Nasdaq: DISH

Pioneer Natural Resources Co. NYSE: PXD

Workday Inc. Nasdaq: WDAY

ZTO Express NYSE: ZTO

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