Travel-related convertibles up; Booking reverses morning losses; Expedia, Carnival gain

By Cristal Cody

Tupelo, Miss., Dec. 21 – Convertible bonds in the travel-related sectors saw gains on Thursday in the wake of a strong earnings report from Carnival Corp.

Booking Holdings Inc.’s 0.75% convertible senior notes due 2025 (A3/A-) reversed early morning losses and traded about 1.75 points higher going out after declining more than 0.5 point earlier in the day.

Expedia Group, Inc.’s 0% convertible senior notes due 2026 (Baa3/BBB) climbed over 1 point in one of the day’s most active issues on $11.5 million of trading.

The bonds had improved over the morning by more than 0.25 point on over $4 million of supply.

Carnival’s 5.75% convertible senior notes due Dec. 1, 2027 added around 4.5 points by the close, but overall trading supply stayed light with just over $4 million of volume after the company reported fourth-quarter and 2023 earnings results.

Early in the session, the issue had climbed over 1.75 points on $1.03 million of trading.

“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.”

Meanwhile, Carnival’s straight junk paper was heavily traded over the session, a source said.

Overall trading in the convertibles space slowed on Thursday with around $601 million of volume during the session, down from $821 million of activity on Wednesday, more than $830 million of supply on Tuesday and $701 million of trading on Monday.

“It’s a quiet day,” a source said. “Tomorrow’s probably going to be quiet – people are turning it into a four-day weekend.”

Stock indices closed higher after ending Wednesday down more than 1%.

The S&P 500 index improved 1.03%, the Dow Jones industrial average rose 0.87%, the Nasdaq added 1.26% and the Russell 2000 index moved 1.26% higher on the day.

Booking improves

Booking Holdings’ 0.75% convertible senior notes due May 1, 2025 (A3/A-) recovered over the session to head out about 1.75 points higher at just under 188 versus an equity price of $3,514.88, a source said after the close on Thursday.

Trading totaled more than $6 million in the issue.

About an hour after the market opened on Thursday, the convertible notes had declined more than 0.5 point to around 185.50 versus an equity price of $3,492.69 on $4.9 million of volume.

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

Shares in Booking finished up 1.45% to $3,519.55 on Thursday. The stock traded from $3,481.97 to $3,523.56 over the day.

Expedia higher

Expedia’s 0% convertible senior notes due Feb. 15, 2026 (Baa3/BBB) climbed over 1 point to 95.25 versus an equity price of $152.88 in one of the day’s more active issues on $11.5 million of volume, according to a market source.

The bonds traded over the morning more than 0.25 point better on over $4 million of supply.

The convertible notes do not bear regular interest.

Expedia’s common stock closed the session up 4.08% to $154.52, near the high end of the day’s $150.10 to $154.58 trading range.

Carnival stronger

Carnival’s 5.75% convertible senior notes due Dec. 1, 2027 rallied around 4.5 points to a 168 handle versus an equity price of $19.25, a source said.

Trading supply was light with just over $4 million of volume reported.

Early Thursday, the issue had climbed over 1.75 points to a 165 handle versus an equity price of $19.02 on $1.03 million of trading after the earnings release.

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

The cruise line operator also announced a 2024 outlook of an adjusted EBITDA of around $5.6 billion, more than 30% higher than 2023.

Carnival’s stock ended 6.2% higher at $19.19 in heavy volume on Thursday. Shares traded from $18.33 to $19.50 over the session.

Mentioned in this article:

Booking Holdings Inc. Nasdaq: BKNG

Carnival Corp. NYSE: CCL

Expedia Corp. Nasdaq: EXPE

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