Morning Commentary: Twitter convertibles unchanged despite lower shares; lower-premium names active

By Rebecca Melvin

New York, Jan. 8 – Twitter Inc.’s convertibles were unchanged early Friday despite shares sinking to all-time lows below $20.00 per share.

Shares have been getting pummeled, a New York-based trader said, but the weakness is not following through to convertibles, which have been relatively inactive.

“Of the trades that have gone up, they have been in line with swap moves, the trader said.

Twitter shares peaked at $23.00 per share this past week and were last at $19.81.

Twitter’s 0.25% convertible due 2019, or the A tranche, was quoted at 83.875 bid, 84.375 offered versus an underlying share price of $19.80.

Twitter’s 1% convertible due 2021, or the B tranche, was 81.875 bid, 82.375 offered versus the same $19.80 share price, the trader said.

As for what was generating the weakness in the shares, a second New York-based trader said, “Twitter is on the list of most-hated stocks.”

That trader was not active in the name and instead was trading lower-premium names like Lam Research Corp. and Microchip Technology Inc. “These are put trades, and there are buyers because people are looking for protection if the market continues to crater,” the trader said.

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