Royal Caribbean convertible notes hit new high; DISH weaker; Sarepta notes contract

By Abigail W. Adams

Portland, Me., Sept. 19 – The convertibles primary market was quiet on Monday after logging its highest volume week of the year the previous week.

More issuance is expected before the close of the third quarter with refinancings continuing to drive issuers to the market.

However, the market may be in wait-and-see mode ahead of the Federal Open Market Committee meeting, a source said.

Markets widely expect the Federal Reserve to announce a 75 bps rate increase on Wednesday; however, uncertainty remains high about the future pace of rate increases and their impact on the economy.

Few were making moves in the secondary space on Monday as the 10-year Treasury hit a 52-week high and equity markets struggled to find direction.

Equity indexes launched the day deep in the red, fought back to hover on either side of unchanged for much of the session and were pushed firmly into positive territory in late-day trading.

The Dow Jones industrial average closed Monday up 197 points, or 0.64%, the S&P 500 index closed up 0.69%, the Nasdaq Composite index closed up 0.76% and the Russell 2000 index closed up 0.81%.

There was $37 million of reported convertible bond trading volume about one hour into the session and $254 million on the tape about one hour before the market close.

Royal Caribbean Group’s 6% convertible notes due 2025 were in focus on a quiet day with an analyst upgrade propelling the notes to their highest outright level since pricing.

DISH Network Corp.’s 0% convertible notes due 2025 (B2/CCC) were weaker in active trading.

While activity in the issue slowed, Sarepta Therapeutics Inc.’s new 1.25% convertible notes due 2027 saw some action with the notes volatile outright and contracting dollar-neutral.

Royal Caribbean rises

Royal Caribbean’s 6% convertible notes due 2025 were in focus on a quiet day with the notes hitting their highest outright level since pricing following an analyst upgrade.

The 6% convertible notes rose 2 points to trade above 127 in intraday activity.

They were changing hands at 126.375 heading into the close.

There was $13 million in reported volume, making the notes the most actively traded convertible bond during Monday’s session.

Royal Caribbean’s stock traded to a high of $52.42 and a low of $49.88 before closing the day at $50.73, an increase of 0.59%.

The notes were on the rise after analysts at Stifel Nicolaus and Barclays raised their price target on the stock.

DISH weaker

DISH’s 0% convertible notes due 2025 were weaker in active trading on Monday.

The notes fell 0.75 point outright to return to a 70-handle.

They were changing hands at 70.125 versus a stock price of $16.73 in the late afternoon, according to a market source.

The yield was just north of 11¼%.

There was $9 million in reported volume.

DISH’s stock traded to a low of $16.56 and a high of $17.29 before closing the day at $17.03, a decrease of 1.5%.

Sarepta contracts

Sarepta’s 1.25% convertible notes due 2027 were volatile outright and weaker dollar-neutral on Monday although volume in the name subsided.

The 1.25% convertible notes traded up 1.25 points outright early in the session but came in outright and were seen contracted dollar-neutral heading into the market close.

The 1.25% notes traded up to 105.25 early in the session but closed the day unchanged outright at 104.

However, the notes contracted about 0.25 point on swap, a source said.

There was $7 million in reported volume.

Sarepta’s stock traded to a low of $110.94 and a high of $115.78 before closing the day at $115.25, an increase of 2.91%.

Mentioned in this article:

DISH Network Corp. Nasdaq: DISH

Royal Caribbean Group NYSE: RCL

Sarepta Therapeutics Inc. Nasdaq: SRPT

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