Convertibles primary market quiet; Pioneer Natural, Southwest Airlines, Jazz volatile

By Abigail W. Adams

Portland, Me., June 15 – The convertibles primary market took a breather from its record-setting pace on Monday with no new deal announcements.

Deals remain in the pipeline, a source said. However, with volatility returning to the markets, the question is when they will launch.

The secondary space was equally quiet on Monday as volatility continued to whipsaw equities.

Indexes opened the day deep in the red on growing concern about a resurgence of Covid-19 cases and a slow economic recovery

However, they popped back into positive territory midway through the session on news the Federal Reserve’s Secondary Market Corporate Credit Facility would begin to purchase the individual bonds of eligible issuers.

There was $62 million in reported volume about one hour into Monday’s session and $338 million about one hour before the market close, sources said.

It was one of the lightest trading volume days in recent weeks, a source said.

“Nothing’s going on on the new issue front. That’s slowed things down a bit,” a source said.

Pioneer Natural Resources Co.’s 0.25% convertible notes due 2025 and Southwest Airlines Co.’s 1.25% convertible notes due 2025 continued to dominate trading activity.

While both issues were soft early in the session, they closed the day largely unchanged, sources said.

Jazz Pharmaceuticals plc new 2% exchangeable notes due 2026 were also volatile with losses mounting for the majority of the session.

However, the notes popped heading into the market close on news of FDA approval for one of its products.

Palo Alto Networks Inc.’s new 0.375% convertible notes due 2025 continued to struggle below par.

While volume was light, Novavax Inc.’s 3.75% convertible notes due 2023 jumped as stock soared following news of a capital raise.

Volatile

Pioneer Natural Resources’ 0.25% convertible notes due 2025 and Southwest Airlines’ 1.25% convertible notes due 2025 again dominated the tape as trading activity surrounding the latest wave of new deals tempered.

Both notes were volatile alongside the broader market, starting the day soft but closing the day largely unchanged.

Pioneer Natural Resources’ 0.25% notes due 2025 traded as low as 113.5 early in the session. They were changing hands around 116 in the late afternoon.

The notes were down about 0.375 to 0.5 points dollar-neutral early in the session but were largely unchanged heading into the market close, a source said.

Pioneer Natural Resources stock traded to a low of $91.38 and a high of $96.76 before closing the day at $95.55, a decrease of 2.73%.

Southwest Airlines’ 1.25% convertible notes traded as low as 120.625 with stock off early in the session.

However, they traded back up to a 123-handle with stock flat in the late afternoon.

While the notes were down about 0.5 point dollar-neutral early in the session, they also rounded out the day largely unchanged, sources said.

Southwest stock traded to a low of $33.61 and a high of $36.92 before closing the day at $36.34, an increase of 1.34%.

Jazz pops

Jazz Pharmaceuticals’ 2% exchangeable notes due 2026 continued to struggle below par for the majority of Monday’s session.

The 2% notes traded as low as 96.625 early Monday with stock off 0.5% and continued to contract dollar-neutral.

However, fortunes shifted shortly before the market close with the notes jumping to a 99-handle with stock up more than 5%.

Jazz stock traded to a low of $101.81 and a high of $111.34 before closing the say at $110.50, an increase of 5.56%.

Stock gained on news the FDA approved Zepzelca for adult patients with small cell lung cancer.

The treatment will become commercially available in the United States in July, according to a company news release.

Jazz was granted commercialization rights in the U.S. for Zepzelca in a licensing agreement with PharmaMar.

Below par

Palo Alto’s 0.375% convertible notes due 2025 continued to trade below par.

The 0.375% notes were changing hands around 96.5 early Monday with stock flat.

They climbed to 98.375 in the late afternoon with stock up more than 1%.

Palo Alto stock traded to a low of $217.48 and a high of $227.07 before closing the day at $226.30, an increase of 2.01%.

The notes have largely struggled below par since hitting the aftermarket on June 4.

While the notes briefly popped above par early last week, they also got caught in last Thursday’s sell-off and sank back below, according to Trace data.

Novavax jumps

Novavax’s 3.75% convertible notes due 2023 jumped on news of a new capital raise.

While volume was light, the notes traded up to an 88-handle as stock jumped more than 10%.

The notes pushed out 3 to 4 points dollar-neutral, a market source said.

Novavax stock traded to a low of $45.00 and a high of $51.53 before closing the day at $51.07, an increase of 12.07%.

The vaccine maker’s stock jumped following news that it had raised $200 million through a private placement sale of 4.4 million shares of series A convertible preferred stock to RA capital.

Mentioned in this article:

Jazz Pharmaceuticals plc Nasdaq: JAZZ

Novavax Inc. Nasdaq: NVAX

Palo Alto Networks Inc. NYSE: PANW

Pioneer Natural Resources Co. NYSE: PXD

Southwest Airlines Co. NYSE: LUV

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.