Morning Commentary: DISH Network convertibles slip on rate concerns; Avid Technology drops

By Rebecca Melvin

New York, Nov. 10 – DISH Network Corp.’s convertible notes were lower on a swap basis early Thursday as interest-rate concerns troubled investors on the heels of the surprise victory of Donald Trump in the U.S. presidential election on Tuesday. The Republican candidate won despite most polls indicating that Democratic nominee Hillary Clinton was the front-runner of the race.

“DISH is down on a rate move. It’s a 10-year bond, and rates have been ripping around. People don’t want to hold it, or they want to hold less of it,” a New York-based sellsider said.

Other rate-sensitive names like real estate investment trusts were also getting some play on Thursday, the sellsider said. But there wasn’t a lot of trading action. People are in a wait and see mode, he said.

“They don’t want to make the wrong move,” he said, adding that most market players are only trimming or shifting things slightly toward where they think the right hedge might be.

DISH’s 3.375% convertible notes due 2026 were quoted at 112.75 bid, 113 offered versus an underlying share price of $57.93. The bond was down about 0.25 point on swap. DISH shares were last at $56.30.

Another name in trade was Avid Technology Inc., and those bonds were seen around 68, which was probably 5 or 6 points lower than the dollar-neutral price, a New York-based trader said.

Avid shares were dropping on lowered guidance. Avid shares were down $1.59, or 25%, at $4.73.

Overall, the market for U.S. convertibles was described as “status quo.” There was not much trading, and things that were in play were mostly mixed. “Nothing really stands out,” a sellsider said.

On Wednesday, health care names were seeing a bid, but there was not a lot of follow-through on that trend yet on Thursday, a sellsider said.

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