Morning Commentary: Travel-related convertibles eyed; Booking down; Expedia, Carnival up

By Cristal Cody

Tupelo, Miss., Dec. 21 – Online travel-reservation firms were leading trading in the convertibles market over the morning in otherwise quiet activity after Carnival Corp. reported fourth-quarter and 2023 earnings results.

Booking Holdings Inc.’s 0.75% convertible senior notes due 2025 (A3/A-) were the most active bonds moving on nearly $5 million of trading, a source said.

The bonds were down over 0.5 point.

Expedia Group, Inc.’s 0% convertible senior notes due 2026 (Baa3/BBB) also were strongly traded with over $4 million of supply over the morning. The notes were trading more than 0.25 point better.

Carnival’s 5.75% convertible senior notes due Dec. 1, 2027 climbed over 1.75 points but volume was light following the earnings release with its stock showing more activity.

“They’re trading a little bit, but it’s a small amount,” a source said early Thursday. “They’re up about a point or two from yesterday. The common stock over the last five days has been trading around the $18.50 area. The bonds haven’t really done anything in the last week.”

Overall secondary volume was up on Thursday but activity was mostly quiet early in the day, a source said.

Volume in convertibles secondary trading topped $83 million just over an hour into trading, compared to more than $76 million of activity in the same period on Wednesday, more than $111 million of volume reported around the same period on Tuesday and over $74 million of supply in the same time range on Monday.

Stock indices moved higher over the morning after closing Wednesday down more than 1%.

The S&P 500 index was up 0.74%, the Dow Jones industrial average improved 0.6%, the Nasdaq rose 0.94% and the Russell 2000 climbed 1.19% in intraday activity.

Booking declines

Booking Holdings’ 0.75% convertible senior notes due May 1, 2025 (A3/A-) declined more than 0.5 point to around 185.50 versus an equity price of $3,492.69 early Thursday, a market source said.

The issue was at the top of the tape with $4.9 million of reported volume over an hour after the markets opened for trading.

Booking Holdings’ brands include booking.com, priceline.com, Kayak and rentalcars.com.

Shares in Booking climbed $46.36, or 1.34%, in thin secondary trading to $3,515.57 early Thursday.

Expedia higher

Expedia’s 0% convertible senior notes due Feb. 15, 2026 (Baa3/BBB) rose over 0.25 point to trade better than 94.50 versus an equity price of $151.19 as the session kicked off, a source said.

Trading was ramping up in the notes with over $4 million of supply seen.

The convertible notes do not bear regular interest.

Expedia’s common stock rose $2.87, or 1.93%, to $151.33 in light trading over the morning.

Carnival up

Carnival’s 5.75% convertible senior notes due Dec. 1, 2027 saw some activity with over $1 million trading an hour into the session after the earnings release, a source said.

The notes climbed over 1.75 points to a 165 handle versus an equity price of $19.02 early Thursday. Trading totaled $1.03 million.

Carnival reported fourth-quarter revenue was a record $5.4 billion, while revenue for the full year hit an all-time high of $21.6 billion.

The Miami-based cruise line operator said in its outlook for 2024 that it expects an adjusted EBITDA of around $5.6 billion, up more than 30% from 2023.

Carnival’s stock was strongly traded over the morning.

Shares climbed $1.32, or 7.28%, to $19.38.

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