Morning Commentary: Pioneer Natural Resources convertibles in focus; Twitter down again

By Abigail W. Adams

Portland, Me., April 27 – The convertibles secondary space continued to see an uptick of activity with equity markets choppy following Tuesday’s bloodbath.

Equity indexes clawed their way back into the green after wavering between large gains and losses early in the session.

The Dow Jones industrial average was up 112 points, or 0.34%, the S&P 500 index was up 0.56%, the Nasdaq Composite index was up 0.64% the Russell 2000 index was up 0.05% shortly before 11 a.m. ET.

There was $85 million in reported convertibles trading volume about one hour into the session.

Pioneer Natural Resources Co.’s deep-in-the-money 0.25% convertible notes due 2025 dominated activity in the secondary space.

The equity-sensitive notes were moving in line with stock.

The notes were changing hands at 216 versus a stock price of $229.64 early in the session.

There was $15 million in reported volume.

Pioneer Natural Resources’ stock opened Wednesday in the red but was trading at $230.50, an increase of 0.79%, shortly before 11 a.m. ET.

There may have been some profit-taking in the name, a source said.

Meanwhile, activity in Twitter Inc.’s convertible notes tempered on Wednesday after dominating activity in the secondary space for much of the week.

However, the social media company’s 0% convertible notes due 2026 continued to come in as questions surface about the financing for Tesla Inc. CEO Elon Musk’s takeover of Twitter.

The 0% convertible notes fell another 1.375 points outright.

The notes were changing hands at 94.125 versus a stock price of $48.62 in the late afternoon.

There was $6 million in reported volume.

Twitter’s stock was well below Musk’s takeout price early Wednesday and was trading at $48.10, a decrease of 3.18%, shortly before 11 a.m. ET.

The 0% convertible notes traded up to a 96-handle following news of Musk’s buyout on Monday.

However, questions have surfaced about Musk’s $21 billion equity commitment to be used to finance the deal.

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