Morning Commentary: Ares Capital convertibles eyed on end-of-life trade; Bill.com active

By Abigail W. Adams

Portland, Me., Jan. 7 – Trading activity in the convertibles secondary space was subdued early Friday as the sell-off in equities resumed.

The Dow Jones industrial average was down 59 points, or 0.16%, the S&P 500 index was down 0.58%, the Nasdaq Composite was down 1.11% and the Russell 2000 index was off 1.07% shortly before 11 a.m. ET.

The 10-year Treasury yield continued to set new highs, hitting 1.782% early in the session.

There was $87 million in reported convertible bonds trading one hour into the session.

However, Ares Capital Corp.’s 3.75% convertible notes due Feb. 1, 2022 accounted for nearly ¼ of the trading activity on the tape.

The 3.75% convertible notes were changing hands just shy of 110.486 early in the session.

They entered their averaging period on Thursday, which will last until Jan. 27.

There was about $20 million in reported volume.

Ares Capital’s stock was changing hands at $20.98, an increase of 0.21%, shortly before 11 a.m. ET.

Bill.com Holdings Inc.’s 0% convertible notes due 2027 were also active early Friday and bouncing off their lows.

The notes changed hands at 95.5 versus an equity price of $204.25 early in the session.

There was $8 million in reported trading volume about one hour into the session.

After trading as high as $214.63 early in the session, Bill.com’s stock turned negative and was quoted at $202.22 shortly before 11 a.m. ET.

The 0% convertible notes traded as low as 93 during Thursday’s session, the lowest outright level for the notes since they priced at par in September 2021.

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