Morning Commentary: Prospect Capital convertibles active; Norwegian Cruise lower

By Abigail W. Adams

Portland, Me., April 21 – The convertibles secondary space stood poised to close the week as it began – quietly.

Trading activity in the space remained muted on another mixed day for equities with the slew of earnings released thus far giving little guidance to markets that have been struggling to find direction.

While equity indexes wavered between gains and losses early in the session, they were driven into negative territory as the session progressed with the Dow Jones industrial average down 76 points, or 0.22%, the S&P 500 index down 0.20%, the Nasdaq Composite index down 0.24% and the Russell 2000 index down 0.61% shortly before 11 a.m. ET.

There was $40 million in reported volume about one hour into the session.

Investment-grade issues were again the top volume movers on Friday although an off-the-run investment-grade issue claimed the title of the top traded name in the secondary space early Friday.

Prospect Capital Corp.’s 6.375% convertibles due 2025 (Baa3/BBB-) were in focus early Friday as the company’s stock prepares to trade ex-dividend.

The 6.375% convertible notes due 2025 saw little movement in price with the notes trading in the 97.75 to 97.875 context, a source said.

The yield was about 7.625%.

There was $9 million in reported volume.

Prospect Capital’s stock was changing hands at $6.79, a decrease of 0.44%, shortly before 11 a.m. ET.

The company announced recently it would pay a monthly dividend of 6 cents on April 24 with stock going ex-dividend on April 25.

NCL Corp. Ltd.’s 2.5% exchangeable notes due 2027 for Norwegian Cruise Line Holdings Ltd. were also active early Friday.

The notes continued to lose steam with the notes off another 0.75 point outright to return to a 73-handle.

They were trading at 73.75 versus a stock price of $12.59 early in the session, according to a market source.

There was $5 million in reported volume.

Norwegian’s stock was seen at $12.72, an increase of 0.63%, shortly before 11 a.m. ET.

The notes were active after Norwegian announced it would release earnings on May 1.

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