Morning Commentary: Etsy convertible notes active; Wayfair notes lower in early trading

By Abigail W. Adams

Portland, Me., Oct. 25 – The convertibles primary market remained dormant on Wednesday as equity indexes gave back their gains from the previous session as markets again reassessed the macro environment.

Equity indexes launched the day deep in the red but were trading off their lows as the session progressed with markets digesting a slew of earnings and macro data that continued to support a hawkish Fed.

Expectations for the latest GDP reading, slated for release on Thursday, are high with the home sale figures released Wednesday blowing past expectations.

The strength of the consumer has continued to take markets by surprise with the cooling in consumer spending that many had expected failing to transpire.

“I thought things would have hit the fan a long time ago,” a source said.

The Dow Jones industrial average was down 49 points, or 0.15%, the S&P 500 index was down 0.79%, the Nasdaq Composite index was down 1.4% and the Russell 2000 index was down 1.37% shortly before 11 a.m. ET.

There was $72 million in reported convertibles trading volume about one hour into the session with few names seeing concentrated trading activity.

However, Etsy Inc.’s 0.25% convertible notes due 2028 were lower with stock under pressure on the heels of an analyst downgrade.

The heavily busted notes were down about 0.5 points outright as stock shed 3%.

The notes were changing hands at 74.375 versus a stock price of $61.32 early in the session, a source said.

The yield was about 6.875%.

There was $4 million in reported volume.

Etsy’s stock was seen at $62.22, a decrease of 3.59%, shortly before 11 a.m. ET.

Stock took a hit after Citi analysts downgraded the stock to “neutral” from “buy” and reduced its price target $67 from $114.

Wayfair Inc.’s most recently priced 3.5% convertible notes due 2028 were weaker as stock took a hit on a heavy day for markets.

The 3.5% convertible notes sank 4.5 points outright with stock off more than 5.5%.

The notes were trading at 115.25 versus a stock price of $41.72 early in the session, according to a market source.

There was $3 million in reported volume.

Wayfair’s stock was trading at $40.70, a decrease of 6.13%, shortly before 11 a.m. ET.

The home decor e-commerce company is scheduled to report earnings on Nov. 1.

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