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Morning Commentary: Convertibles trading volume light amid equity market volatility
By Abigail W. Adams
Portland, Me., Feb. 6 – Trading volume in the convertibles market was light early in Tuesday’s session as equity markets stand poised for a volatile session after steep losses on Monday.
While the market is down, the equity sell-off has not had that dramatic of an impact on the convertibles space, a market source said. “I haven’t seen any real valuation moves one way or the other,” the source said.
Trading action continued to be subdued in the space on Tuesday.
“A lot of people are on the sidelines waiting to see what the market is going to do,” the source said.
In the long-term, the increase in volatility will be a positive for the convertibles market, the source said.
While trading activity was again light early in Tuesday’s session, after a slow day on Monday, some names were on the tape after reporting quarterly earnings reports.
Lumentum Holdings Inc.’s 0.25% convertible notes due 2024 were up about 5 points on an outright basis after beating guidance in its second-quarter earnings report. The convertible notes traded up to 107 early in Tuesday’s session, as stock was up 10%.
Array BioPharma Inc.’s 2.625% convertible notes due 2024 regained the 2 points it lost on Monday in early trades on Tuesday. The notes traded up to 125.5 as equity increased 9.44%.
Array reported its second-quarter earnings prior to the market open on Tuesday.
Proofpoint Inc.’s 0.75% convertible notes due 2020 dropped about 4 points on an outright basis to 131 in early trades on Tuesday as its stock was down about 0.80%. Proofpoint reported its fourth-quarter earnings after the market close on Monday.
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