Convertibles primary quiet; Fortive, Pioneer Resources, Illumina active; EQT down

By Abigail W. Adams

Portland, Me., July 27 – The convertibles primary market saw a slow start to the week with no new deals launching.

However, the July 27 week is expected to be active as companies exit their earnings season blackout.

With several deals in the pipeline, August is also expected to be a busy month, sources said.

Meanwhile, while the convertibles secondary space was relatively active early in the session with $83 million in reported volume, activity tapered off as the session progressed.

There was $382 million in reported volume about one hour before the close with few notable movers in the space, sources said.

Pioneer Natural Resources Co.’s 0.25% convertible notes due 2025 continued to see high-volume activity with the notes down outright as stock came in.

While volume was light, industry peer EQT Corp.’s 1.75% convertible notes due 2026 were trading down as stock dropped 5% after second-quarter earnings.

Fortive Corp.’s 0.875% convertible notes due 2022 continued to be a major volume mover ahead of the industrial conglomerate’s earnings report with the notes again sinking below par.

Illumina Inc.’s 0% convertible notes due 2023 also saw renewed attention with the notes active but slightly weaker dollar-neutral as stock posted gains.

While the secondary space was quiet on Monday, the overall space remained firm.

The market was well-bid with buyers turning their attention to outstanding convertible notes amid the shortage of new paper in the market, a source said.

Trading down

Pioneer Natural Resources’ 0.25% convertible notes due 2025 were again one of the major volume movers in the secondary space with the notes down slightly as stock came in.

The notes from the oil and gas company were down about 1 point outright to change hands at 119.875 in the late afternoon with stock off a little over 1%, a source said.

There was more than $18 million in reported volume heading into the market close.

Pioneer stock traded to a high of $100.02 and a low of $97.77 before closing the day at $98.52, a decrease of 1.16%.

Pioneer Natural Resources stock was trading off after natural gas producer EQT reported second-quarter earnings.

While volume was light, EQT’s 1.75% convertible notes due 2026 were down about 3 points outright with stock off 5%.

The 1.75% notes were changing hands at 114 in the late afternoon.

EQT stock traded to a low of $13.11 and a high of $14.43 before closing the day at $13.41, a decrease of 5.56%.

EQT reported a loss per share of 18 cents, which was greater than the loss per share of 12 cents that analysts expected.

Pioneer is slated to report earnings on Aug. 4.

Fortive below par

Fortive’s 0.875% convertible notes due 2025 were again major volume movers on Monday as the market eyes the company’s upcoming earnings report.

The 0.875% notes again slipped below par after toping par for the first time since March during Friday’s session.

There were several large prints of the notes around 99.5 early in the session, a market source said.

The notes were changing hands at 99.625 in the late afternoon.

More than $15 million of the bonds were on the tape heading into the market close.

While Fortive stock was posting gains on Monday, the 0.875% notes mostly trade outright, a source said.

Fortive stock traded to a high of $72.14 and a low of $71.02 before closing the day at $71.90, an increase of 1.27%.

The industrial conglomerate is slated to report earnings after the market close on Tuesday.

Illumina comes in

Illumina’s 0% convertible notes due 2023 also saw a fresh round of activity on Monday as stock shot up more than 3%.

However, while stock was on the rise, the 0% convertible notes were weaker dollar-neutral.

The 0% convertible notes were marked at 113 in the late afternoon.

While the level was a new recent high for the notes, they were coming in slightly on a dollar-neutral basis, a source said.

Illumina stock traded to a high of $395.5 and a low of $383.23 before closing the day at $393.04, an increase of 2.82%.

Mentioned in this article:

EQT Corp. NYSE: EQT

Fortive Corp. NYSE: FTV

Illumina Inc. Nasdaq: ILMN

Pioneer Natural Resources Co. NYSE: PXD

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