Morning Commentary: Airline convertibles fly higher again on Covid-19 vaccine news

By Rebecca Melvin

New York, Nov. 24 – Airline convertibles extended gains on Tuesday after more positive news in the development of a Covid-19 vaccine pushed the companies’ stocks and bonds higher on Monday.

Both Southwest Airlines Co.’s 1.25% convertible notes due 2025 and American Airlines Group Inc.’s 6.5% convertible notes due 2025 were higher on the news that a vaccine candidate from AstraZeneca plc and Oxford University is indicating effectiveness in studies and makes a third promising candidate to grapple with the fight against the virus.

American Airlines’ 6.5% convertible notes due 2025 continued to fly higher on Tuesday after gains notched on Monday.

The American Airlines paper was up 6 or 7 points in the early going to about 113 against a 6.4% gain in the underlying shares to $14.43. The American Airlines convertibles had risen about 4 points on Monday to 104.

Southwest Airlines’ 1.25% convertibles due 2025 were trading around 153 last after closing around 148 on Monday.

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