Morning Commentary: Carnival convertibles hit new heights; Zscaler jumps pre-earnings

By Abigail W. Adams

Portland, Me., Dec. 1 – The convertibles primary market remained dormant on Thursday with hopes for a busy week of new issuance dashed.

However, the convertible secondary space remained active early Thursday as equities pulled back after Wednesday’s head-spinning rally.

The Dow Jones industrial average was down 334 points, or 0.98%, the S&P 500 index was down 0.27%, the Nasdaq Composite index was down 0.19% and the Russell 2000 index was down 0.26% shortly before 11 a.m. ET.

There was $86 million on the tape about one hour into the session with several names on the move amid the volatility in equities.

Carnival Corp.’s 5.75% convertible notes due 2027 hit a new outright high in early trading.

The notes climbed another 1.5 points outright after popping above par the previous session.

The 5.75% notes were changing hands at 102 versus a stock price of $10.19 early in the session.

There was $7 million in reported volume.

Carnival’s stock was trading at $9.98, an increase of 0.5%, shortly before 11 a.m. ET.

Zscaler Inc.’s 0.125% convertible notes due 2025 surged in early trading on the eve of the cybersecurity company’s earnings report.

The 0.125% notes were up 7 points outright with stock up almost 5%.

The notes were changing hands at 118 versus a stock price of $141.59 early in the session, according to a market source.

There was $5 million in reported volume.

Zscaler’s stock was trading at $139.82, an increase of 4.89%, shortly before 11 a.m. ET.

Zscaler’s 0.125% notes were volatile in active trading on Wednesday with the company’s stock and convertible notes under pressure early in the session but paring their losses by the market close.

Stock was trading down in sympathy with industry peer Crowdstrike Inc., which reported disappointing earnings.

Zscaler is scheduled to release earnings after the market close.

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