Fortive convertibles in focus; Palo Alto improves dollar-neutral; Intel notes active

By Abigail W. Adams

Portland, Me., Nov. 27 – The convertible secondary space saw decent trading volume on Wednesday although it was primarily driven by end-of-month activity with markets closed on Thursday in the United States for the Thanksgiving holiday, sources said.

There was $67 million in reported volume a little more than one hour into Wednesday’s session and $323 million on the tape by the late afternoon.

Fortive Corp.’s 0.875% convertible notes due 2022 were the most actively traded issue during Wednesday’s session.

However, the notes were mostly trading sideways.

Booking Holdings Inc.’s 0.9% convertible notes due 2021 also saw concentrated trading activity although the notes and underlying equity were largely flat, a source said.

In a carry-over from Tuesday’s session, Intel Corp.’s 3.25% convertible notes due 2039 remained active on call news.

Palo Alto Networks Inc.’s 0.75% convertible notes due 2023 also remained a volume mover with the notes slightly improved on a dollar-neutral, or hedged, basis.

Fortive little moved

Fortive’s 0.875% convertible notes due 2022 were the major volume movers during Wednesday’s session with almost $30 million of the bonds on the tape by the late afternoon.

While the bonds were active, they were largely trading sideways with little movement in the notes or the underlying shares, a market source said.

The 0.875% notes were wrapped around 98.5. Fortive stock closed Wednesday at $72.36, an increase of 0.29%.

There appeared to be a large seller in the market with some $5 million plus trades on the tape.

With no news or volatility in the name, the trading activity was most likely the result of someone raising cash, a source said.

Booking Holdings’ 0.9% convertible notes due 2021 were also active although the notes and underlying equity were also largely flat, a source said.

The 0.9% notes were changing hands at 111.625 early in the session. Booking stock closed Wednesday at $1,906.45, an increase of 1.01%.

The activity was also most likely the result of a cash raise, a source said.

Intel active

Intel’s 3.25% convertible notes due 2039 continued to see active trading on Wednesday following news the notes would be redeemed in January.

The notes continued to contract.

They traded down about 1 point outright to 287.625 with stock largely flat. Intel stock closed Wednesday at $58.51, a decrease of 0.66%.

The notes came in about 0.25 point on a dollar-neutral basis on Tuesday following Intel’s announcement that it was calling the remaining $372 million outstanding.

While the notes will be redeemed at par plus accrued interest on Jan. 9, holders will convert out of the deep-in-the-money notes.

However, holders will not be paid accrued interest in the conversion of the notes, which caused them to trade down on the news.

Palo Alto improves

In another carry-over from Tuesday’s session, Palo Alto’s 0.75% convertible notes due 2023 remained active on Wednesday with the notes improving on a dollar-neutral basis.

The 0.75% notes were wrapped around 108 on Wednesday with stock volatile throughout the session.

They were seen better by about 0.25 point dollar-neutral, according to a market source.

Palo Alto stock traded to a low of $214.90 and a high of $223.43 before closing Wednesday’s session at $222.27, an increase of 0.86%.

While the notes dropped about 8 points on an outright basis on Tuesday, they were moving largely in line dollar-neutral as stock sold off.

Palo Alto stock sank more than 11% on Tuesday following its earnings report.

While the cyber-security company beat on both the top and bottom line, weak forward guidance due to another acquisition sparked a sell-off in the stock.

Mentioned in this article:

Booking Holdings Inc. Nasdaq: BKNG

Fortive Corp. NYSE: FTV

Intel Corp. Nasdaq: INTC

Palo Alto Networks Inc. NYSE: PANW

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