Morning Commentary: Western Digital convertibles continue to gain; Iconix notes active

By Abigail W. Adams

Portland, Me., Feb. 16 – Friday morning was quiet in the convertibles space, which has seen light trading volume throughout the week. Western Digital Corp.’s 1.5% convertible notes due 2024, however, continued to be actively traded and gaining strength.

The 1.5% notes were wrapped around 102.5 in early trades during Friday’s session with Western Digital stock up 1.02% to $85.41. The recently priced notes were one of the few new deals to maintain their strength as volatility hit the broader markets and other new deals fell apart.

The notes weakened on Feb. 9 but have been making gains throughout the week.

Iconix Brand Group Inc.’s outstanding 1.5% convertible notes due March 15, 2018 saw some action early in Friday’s session with the notes continuing to trade in the 95 range.

The New York-based owner, licenser and marketer of consumer brands announced on Friday that it had upped its exchange agreement with some holders of the 1.5% notes for new 5.75% notes due 2023 to $125 million from $110 million.

The outstanding 1.5% notes have been in focus since Monday when the exchange agreement was announced.

The exchange agreement alleviated concerns Iconix would default on the 1.5% notes, which sent the notes tumbling to the 70 to 80 range in November. “It looks like they’ll make good on the bonds,” a market source said.

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