Morning Commentary: Carnival convertible notes sink further in quiet start to trading

By Abigail W. Adams

Portland, Me., Nov. 21 – The convertibles secondary space was off to a slow start on Monday with equity markets in the red as markets again questioned the dovish pivot rally that propelled markets higher early last week.

The Dow Jones industrial average was down 87 points, or 0.26%, the S&P 500 index was down 0.61%, the Nasdaq Composite index was down 1.03% and the Russell 2000 index was down 0.88% shortly before 11 a.m. ET.

There was $40 million on the tape a little more than one hour into the session with few names seeing concentrated trading activity.

Carnival Corp.’s recently priced 5.75% convertible notes due 2027 sank further below par on an outright basis as stock continued its downtrend.

The 5.75% convertible notes were changing hands at 96.625 versus a stock price of $9.26 early in the session, according to a market source.

The $1 billion issue priced at par on Nov. 15.

With $6 million in reported volume, the notes were the most actively traded in the secondary space.

Carnival’s stock was seen at $9.24, a decrease of 2.43%, shortly before 11 a.m. ET.

The notes initially performed well on their aftermarket debut with the notes holding above par and expanding dollar-neutral.

However, the notes have traded below par since.

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