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Morning Commentary: Convertibles off to a sleepy start; Snap notes active pre-earnings
By Abigail W. Adams
Portland, Me., April 22 – The convertibles secondary space was off to a sleepy start on Monday with investment-grade issues once again driving volume.
As market players await the primary market to reactivate, attention was shifting to the slew of earnings reports expected in the upcoming week.
Equity indexes launched the week in the green with Treasuries flat as markets eye the week’s upcoming bond auctions.
The Dow Jones industrial average was up 75 points, or 0.21%, the S&P 500 index was up 0.25%, the Nasdaq Composite index was up 0.15% and the Russell 2000 index was up 0.45% shortly before 11 a.m. ET.
There was $70 million in reported volume about one hour into the session with Duke Energy Corp.’s 4.125% convertible notes due 2026 (Baa2/BBB) the top traded issue in the space.
The 4.125% notes were little changed in the active trade with the notes changing hands at 98.875 versus a stock price of $98 early in the session, a source said.
There was $11 million in reported volume.
Duke’s stock was trading at $98.23, a decrease of 0.01%, shortly before 11 a.m. ET.
Snap Inc.’s 0.125% convertible notes due 2028 were active with the camera and social media company slated to report earnings on Thursday.
The 0.125% notes were largely unchanged in the early morning action with the notes trading at 75.75 versus a stock price of $11.62.
The yield was about 7.5%, a source said.
There was $7 million in reported volume.
Snap’s stock was trading at $11.10, a decrease of 0.58%, shortly before 11 a.m. ET.
Snap’s earnings will be closely watched after the company’s previous earnings report sent stock tumbling about 35%.
The 0.125% convertible notes have largely been stuck in the 75 to 76 context since Snap’s previous earnings report with stock largely trading on an $11-handle.
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