Convertibles secondary volume spread out among issuers; one name continuing to lift off

Chicago, July 19 – Cruise lines were still enjoying fewer mandated travel restrictions for their guests on Tuesday, evidenced by a bump in convertible bond prices.

And, without a primary calendar, the notes from, now long-term, volume leader Southwest Airlines Co. were still on the radar.

However, a cloud provider jumped onto the tape on Tuesday to shake things up in the sector.

Convertibles trading volume on Tuesday was around $485 million in the space, soon before the market closed.

Freer cruising

Royal Caribbean Cruises Ltd.’s 4.25% convertible bonds due 2023 were changing hands and, like the company’s stock, were better on the good news that the Centers for Disease Control and Prevention was dropping its mandatory Covid-19 program.

On Tuesday, the bonds moved up 3.125 points by late in the afternoon to trade at 96.625 before a retraction put them closer to 95.5 almost at the close of business.

The issue priced in June 2020 in the first wave of pandemic financing at par with a 25% conversion premium on a $57.69 stock price.

The cruise line operator’s stock was up 5.76% on Tuesday to close at $36.36.

Since the beginning of the year, the stock price has dropped 55.02%.

After the initial Covid drop, the stock was actually recovering, tapping out around $96.00 per share at the end of 2021, but since January the stock has again been on a downtrend with the five-day trend from the past week a rare bright spot for the year to date.

LUV-ing it

Traders were still enjoying flying in and out of Southwest Airlines’ 1.25% convertibles due 2025 (Baa1/BBB).

For one more day, the bonds were again the volume leader, accounting for around 5% of the action.

The bonds were better, up 3 points in the late afternoon, routinely trading hands at just over 131.

The convertibles have been steadily gaining since mid-June.

The Dallas-based airline’s equity was 3.88% improved on Tuesday.

The stock has also been in steady upswing mode since mid-June.

RingCentral active

Cloud-based communications software provider RingCentral Inc. was on the convertible bond tape on Tuesday.

The bonds were changing hands more frequently than usual for the 0% convertibles due in 2025.

Barely on the tape on Monday, the notes were actively in play on Tuesday, dipping in the early afternoon but ending the day nearly where they started, at 81¾.

Meanwhile, the company’s stock had a good day, closing up 7.32%.

The one-year trend has been one of steady decline for the stock, down 80.06%.

The bonds were similarly above par one year ago, but have been generally dropping, now down 25 points year over year.

There was more than $8 million of movement on the notes on Tuesday.

Mentioned in this article:

Royal Caribbean Cruises Ltd. NYSE: RCL

Southwest Airlines Co. NYSE: LUV

RingCentral Inc. NYSE: RNG

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