Morning Commentary: Convertibles secondary flat in quiet trading; Zendesk active

By Abigail W. Adams

Portland, Me., Nov. 22 – It was an uneventful morning in the convertibles secondary space on Tuesday with the market flat in thin volume as equities struggled to find direction.

Equity indexes wobbled between minor gains and losses early in the session but were holding onto gains shortly before 11 a.m. ET with the Dow Jones industrial average up 293 points, or 0.87%, the S&P 500 index up 0.80%, the Nasdaq Composite index up 0.55% and the Russell 2000 index up 0.61%.

There was $55 million in reported volume about one hour into the session with few names seeing concentrated activity and little price movement in the names that did trade, a source said.

Zendesk Inc.’s convertible notes continued to see heavy volume following the completion of its acquisition by a consortium of private equity investors.

The convertible notes were trading up to their takeout prices.

Zendesk’s 0.625% convertible notes due 2025 remained wrapped around 99.375 in heavy volume.

The 0.25% convertible notes due 2023 continued to trade around 126.75.

The 0.625% convertible notes will be taken out at par, and the 0.25% convertible notes will be taken out according to the takeout matrix, sources said.

Zendesk formally announced private equity firms Permira and Hellman & Friedman LLC completed their acquisition of the company prior to the market open on Tuesday.

The $10.2 billion acquisition was announced in late June after widespread speculation.

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