Morning Commentary: Convertibles primary marks historic week of issuance; Tandem rises

By Abigail W. Adams

Portland, Me., March 8 – The convertibles primary market was quiet on Friday after a historic week for new deal activity with $5.95 billion pricing in nine deals.

The March 3 week marked the heaviest volume week by face amount for new deal activity since the Nov. 14, 2021 week when $9.629 billion priced in 10 deals.

There are only 13 weeks in the past decade where weekly volume exceeded the $5 billion mark with eight of those weeks falling in 2020 and 2021.

However, the primary market has now broached that threshold twice in the past three weeks with the Feb. 18 week seeing $5.459 billion price in five deals.

The convertibles primary market is expected to continue to unleash deals in the week ahead with some questioning if the active pace is to become a new normal for the market as the issuers that priced in 2020 and 2021 refinance.

While there was some concern about indigestion, demand for new paper remained strong amid the deluge with the majority of deals to price putting in strong aftermarket performances.

The secondary space saw a relatively slow start on Friday as the activity surrounding recent issues settled.

Equity markets were strong on the heels of the latest U.S. Nonfarm Payrolls report, which came in hotter-than-expected but also reflected an unexpected uptick in unemployment.

The Dow Jones industrial average was up 99 points, or 0.26%, the S&P 500 index was up 0.49%, the Nasdaq Composite index up 0.75% and the Russell 2000 index was up 1.18% shortly before 11 a.m. ET.

There was $107 million on the tape about one hour into the session with the top three names accounting for about one-third of the total volume in the space.

Tandem Diabetes Care Inc.’s 1.5% convertible notes due 2029 continued to shoot higher alongside stock early in the session.

The 1.5% notes were up another 1.5 points outright to trade at 111 versus a stock price of $30.13 early in the session, according to a market source.

There was $11 million in reported volume.

Tandem’s stock traded as high as $30.48 before giving back its gains and dropping into negative territory.

Stock was changing hands at $29.52, a decrease of 0.49%, shortly before 11 a.m. ET.

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