Morning Commentary: New convertible paper drifts from focus; Lumentum, Anthem active

By Abigail W. Adams

Portland, Me., July 20 – The new convertible notes that priced over the past week drifted out of focus on Friday as long-standing issuances emerged as volume leaders early in the session.

While there was about $75 million on the tape, trading activity was dispersed across a breadth of names with few issues seeing more than $5 million trade, a market source said.

Volume was expected to drop off into the afternoon with most getting business done early in preparation for the weekend.

Lumentum Holdings Inc.’s 0.25% convertible notes due 2024 were among the volume leaders with about $5 million on the tape.

The notes were down about 6 points outright with stock off more than 8% early in the session.

The notes were seen trading at 113.5 versus an equity price of $54.00.

The optical components maker’s stock took a hit on Friday on trade war tensions with China.

Anthem Inc.’s 2.75% convertible notes due 2042 were also active on the tape. The notes, which trade at triple par, are essentially an equity surrogate, a market source said.

The notes were seen trading at 342. Anthem stock was down slightly to $248.45 early Friday.

Only about 1/3 of the original $1.5 billion issue amount remains outstanding with many holders already having converted them out, a source said.

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