Morning Commentary: Trading light amid volatility; Ares active; recent deals struggle

By Abigail W. Adams

Portland, Me., March 11 – Trading volume in the convertibles secondary space was light early in the session as the rebound in equities proved to be short-lived.

There was about $61 million in reported volume a little over one hour into Wednesday’s session as stock market indexes erased their gains from the previous session.

The Dow Jones industrial average was down 3.66%, the S&P was down 3.35% and the Nasdaq Composite was down 3.08%, shortly before 11 a.m. ET.

Ares Capital Corp.’s 4.625% convertible notes due 2024 topped the volume chart early in the session.

The notes were changing hands at 102.625 with more than $6 million on the tape, according to a market source.

The investment-grade paper was holding up well despite the volatility in the market.

Investment grade and short duration paper has been in demand throughout the week as equities whipsaw between substantial gains and losses, sources said.

While Ares Capital was holding up well, several of the recent deals to price at the onset of the market turmoil were not faring as well.

Square Inc.’s recently priced 0.125% convertible notes due 2025 were changing hands at 92.125 early in Wednesday’s session with about $5 million in reported volume, according to a market source.

Square’s stock traded down to $64.37, a decrease of 4.36%, shortly before 11 a.m. ET.

Square priced a $1 billion offering of the 0.125% notes at par on March 3 when stock was $80.67.

RingCentral Inc.’s 0% convertible notes due 2025 were changing hands at 94.125 early in the session.

RingCentral stock was changing hands at $209.41, a decrease of 2.07%, shortly before 11 a.m. ET.

RingCentral priced a $1 billion offering of the 0% convertible notes at par on Feb. 27 when stock was $240.28.

Live Nation Entertainment Inc.’s 2% convertible notes due 2025 was down to 89.375 early in Wednesday’s session.

Live Nation stock traded down to $46.55, a decrease of 7.57%, shortly before 11 a.m. ET.

The notes have traded in the mid to low 90s since late February when volatility began to rear its head on coronavirus concerns.

The entertainment industry has been particularly hard hit by the growing pandemic, sources said.

Live Nation priced a $350 million offering of the convertible notes on Jan. 29 at par when stock was $70.57.

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