Morning Commentary: MicroStrategy convertible notes volatile in early trading

By Abigail W. Adams

Portland, Me., March 18 – It was a quiet start to the week in the convertibles primary market with no new deals launching.

There may be some primary market activity in the next few sessions, sources said.

However, no deluge is expected with markets laser focused on the Fed as the Federal Open Market Committee convenes on Tuesday.

Meanwhile, it was an equally quiet start to the day in the secondary space with equity indexes mixed.

While AI momentum reignited a surge in the tech-heavy Nasdaq, the rate-sensitive small cap index remained in negative territory.

The Dow Jones industrial average was up 105 points, or 0.27%, the S&P 500 index was up 1.03%, the Nasdaq Composite index was up 1.65% and the Russell 2000 index was down 0.25% shortly before 11 a.m. ET.

MicroStrategy Inc.’s latest 0.875% convertible notes due 2031 remained active and volatile their second day in the secondary space.

The notes traded as high as 104 pre-open but sank back to a par-handle as stock continued to pull back from recent heights.

The notes were trading at 100.625 early in the session.

There was $6 million in reported volume.

MicroStrategy’s stock was trading at $1,653.50, a decrease of 7.24%, shortly before 11 a.m. ET.

The 0.875% convertible notes were volatile on an outright basis on their aftermarket debut last Friday.

While the notes held above par as stock sank early in the session on Friday, they traded as high as 105 heading into the close as MicroStrategy’s stock popped to set a new 52-week high.

While volatile outright, the notes performed well on hedge and expanded about 1.5 to 2 points dollar-neutral.

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