Morning Commentary: Liberty Broadband exchangeables edge up; Liberty Media lower

By Cristal Cody

Tupelo, Miss., July 21 – The convertibles primary market continued to remain quiet headed into the weekend, while secondary trading got off to a sleepy start on Friday.

Liberty Broadband Corp.’s 3.125% exchangeable senior debentures due 2053 saw the heaviest trading by late morning on $8 million of volume, though the paper was modestly higher, a source said.

Secondary volume in the convertibles space was only $17 million as trading first got underway but had totaled $77 million by late morning, according to a market source.

“It’s Friday during the summer,” the source noted.

Market tone was strong over the morning with stock indices all higher.

The S&P 500 index rose 0.24%, the Nasdaq was up 0.06%, the Dow Jones industrial average improved 0.21% and the Russell 200 index gained 0.11%.

Meanwhile, Liberty Media Corp.’s paper has been active after the company announced on Thursday an adjustment to its media component of the securities basket underlying its 1.375% cash convertible senior notes due 2023.

Liberty Media’s notes convertible into shares of Sirius XM Holdings Inc. also had rallied on Thursday after the gain in equity but moved lower early Friday.

Liberty Media’s 3.75% convertible senior notes due 2028 were down about 1 point over the morning after Sirius’ shares gave back the prior day’s gains.

“The stock shot through the roof yesterday,” a source said of Sirius.

The 2.75% convertible senior notes went out Thursday up 2.5 points but were not active in trading early Friday.

Liberty Broadband active

Liberty Broadband’s 3.125% exchangeable senior debentures due 2053 rose 0.12 point to 100.904 with a 2.77% yield on $8 million of trading early Friday, a source said.

The equity was priced at $395.19.

Liberty Broadband’s shares (Nasdaq: LBRDA) were down 0.07% late morning at $87.35.

Liberty Broadband sold $1 billion of the bonds on Feb. 22, which are exchangeable for Charter Communications, Inc. class A common stock.

The Englewood, Colo.-based company (Nasdaq: LBRDA) owns interests in communications businesses, including Charter and its Alaska subsidiary GCI.

Liberty Media declines

Also Friday, Liberty Media’s 3.75% convertible senior notes due 2028 were down about 1 point at 112.125 over the morning, a source said.

Liberty Media sold $500 million of the notes on March 8. The notes are convertible into Liberty’s series A Liberty SiriusXM common stock.

The 2.75% convertible senior notes due 2049 were not active in trading early Friday. The notes were last seen on Thursday at 95.5.

Liberty Media’s 2.75% notes went out Thursday up 2.5 points on $13 million of volume.

The bonds are equity sensitive since they convert into Sirius XM’s common equity.

Sirius XM’s shares climbed to $7.81 on Thursday on 127 million shares traded, up from $5.49 on Wednesday when 30 million shares changed hands.

The stock closed a week ago at $4.75.

But by early Friday, gains were being erased with Sirius XM’s shares (Nasdaq: SIRI) down 10.59% at $6.99 on 49 million shares traded.

Liberty Media, an Englewood, Colo.-based media, communications and entertainment company, said Thursday the media component on its 1.375% notes is now 0.2547 of a share of series A Liberty Formula One common stock.

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