Morning Commentary: Convertibles secondary trading slow; Southwest Airlines active

By Abigail W. Adams

Portland., Me., Sept. 27 – The convertibles secondary space saw a slow start to the day as equity markets struggled to find direction amid a rising 10-year Treasury yield.

While the Dow Jones industrial average was positive early in the session, the S&P 500 index and Nasdaq Composite launched the day deep in the red, although they pared their losses as the session progressed.

The Dow was up 176 points, or 0.51%, the S&P 500 was down 0.10% and the Nasdaq Composite was down 0.46%, shortly before 11 a.m. ET.

After breaking above a yield of 1.5%, the Treasury yield came in slightly, causing an uptick in growth stocks.

However, the secondary space was quiet amid the volatility in equities with many on the sidelines as the end-of-quarter approaches, a source said.

There was $52 million in reported volume a little more than one hour into the session with few names seeing concentrated trading activity.

Southwest Airlines Co.’s 1.25% convertibles due 2025 (Baa1/BBB) was active early in the session with the notes moving up alongside stock.

The 1.25% convertible notes were changing hands at 155.5 versus a stock price of $54.18.

There was $4 million in reported volume.

Southwest Airlines’ stock was trading at $53.98, an increase of 2.14%, shortly before 11 a.m. ET.

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