Morning Commentary: Convertibles secondary trading quiet; travel names in focus early

By Abigail W. Adams

Portland, Me., July 7 – Travel names were in focus on an otherwise quiet morning in the convertibles secondary space with equity indexes in the green as the market digested the latest jobs report and Federal Reserve June minute notes.

Inflation and recession continued to be the main focus of the market with views mixed about the severity of the economic downturn in store.

Small cap and tech stocks lead gains in equities with the 10-year Treasury yield also on the rise although the yield curve remained inverted.

The Dow Jones industrial average was up 281 points, or 0.91%, the S&P 500 index was up 1.17%, the Nasdaq Composite index was up 1.71% and the Russell 2000 index was up 2.26% shortly before 11 a.m. ET.

The 10-year Treasury yield rose 6.7 basis points to 2.98% early in the session.

There was $50 million in reported convertibles trading volume about one hour into the session with travel names dominating the tape although with little movement in price.

Southwest Airlines Co.’s 1.25% convertibles due 2025 (Baa1/BBB) were up alongside stock in heavy volume.

The 1.25% convertible notes gained 1 point outright with stock up about 1.5%.

The notes were changing hands at 119.5 versus a stock price of $36.61 early in the session, according to a market source.

There was $8.5 million in reported volume.

Southwest’s stock was trading at $36.90, an increase of 1.62%, early in the session.

JetBlue Airways Corp.’s 0.5% convertible notes due 2026 were also active with the notes slightly weaker.

The 0.5% notes were down about 0.5 point outright to trade at 72.5 with a yield of 9.426%.

There was $6.5 million in reported volume.

JetBlue’s stock was seen at $8.42, an increase of 1.62%, shortly before 11 a.m. ET.

The 0.5% notes have been on a 73-handle for much of July.

While JetBlue continues its attempt to outbid Frontier for Spirit Airlines, the convertibles market did not seem to be expressing an opinion on the attempted acquisition, a source said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.