Morning Commentary: Workday convertibles in focus on quiet morning for secondary market

By Abigail W. Adams

Portland, Me., Aug. 27 – The convertibles secondary space was quiet early in Friday’s session with market players glued to Federal Reserve chairman Jerome Powell’s speech for indications about the future of the Fed’s monetary policy.

Equity benchmarks jumped as Powell took a dovish tone.

While Powell stated bond tapering could begin in the current year, which market participants widely expected, he continued to stress the central bank’s patience regarding rate hikes.

The Dow Jones industrial average was up 220 points, or 0.63%, the S&P 500 index was up 0.69% the Nasdaq Composite was up 0.86% and the Russell 2000 index was up 1.56% shortly before 11 a.m. ET.

The convertibles secondary space saw a slow start to the day with $78 million in reported volume about one hour into the session with few names seeing concentrated trading activity.

However, Workday Inc.’s 0.25% convertible notes due 2022 were in focus with the notes gaining outright alongside stock following an earnings beat.

The short-duration notes jumped 17 points outright with stock up over 10%.

They were changing hands at 187 versus a stock price of $271.59 early in the session.

There was more than $13 million in reported volume.

Workday’s stock was changing hands at $272.87, an increase of 10.58%, shortly before 11 a.m. ET.

The financial management and human resource software company reported earnings per share of $1.23 versus analyst expectations for earnings of 78 cents.

Revenue was $1.26 billion versus analyst expectations for revenue of $1.24 billion.

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