Morning Commentary: Splunk bonds find footing; vol. names continue to see improved bid

By Rebecca Melvin

New York, Oct. 9 – Both of Splunk Inc.’s new convertible issues traded slightly lower on an outright basis but were higher on a hedged basis on Tuesday as shares of the San Francisco-based software company slipped.

The larger $1.85 billion issue of 0.5% five-year Splunk bonds were seen trading at 96, while the 1.125% convertibles due 2025 were seen around 95, a New York-based trader said. The underlying shares were down $1.21, or 1.2%, at $103.78.

“Splunk has been very active. And those bonds seem to be finding a level here,” the trader said. The recent new issue had been hurt pretty significantly in the equity sell-off but was regaining ground as a balanced new issue. It was called up about 0.125 point on the morning on a hedged basis.

In general convertibles were trending well, with traditional vol. names “going better.” Issues of companies like Microchip Technology Inc. and ServiceNow Inc. are examples of this general theme that has developed on the heels of the equity market selling off.

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