Southwest Airlines convertibles active; Booking trades with shares; Okta notes dip

By Rebecca Melvin

Concord, N.H., July 9 – Activity in the convertibles secondary space was steady on Friday compared to recent levels as equities recovered from a tumble on Thursday. It didn’t appear that any single name in convertibles was outpacing in terms of volume.

Equity benchmarks opened higher and essentially edged upward throughout the session, closing at another set of record highs. The S&P 500 index had also notched a record on Wednesday.

The Dow Jones industrial average was closed up 448.23 points, or 1.3%, the S&P 500 index closed the day up 1.13%, the Nasdaq Composite finished up 0.98%, while the Russell 2000 index added 2.2% on the day.

The convertibles secondary space saw volume that was comparable to that of recent days with $116 million on the tape by midday.

Southwest Airlines Co.’s 1.25% convertibles due 2025 were trading up in the secondary space with a trade notched at 150.9 at late morning, compared to 146 late Thursday, according to Trace data.

Southwest Airlines’ shares were up nearly 3% in the early going, trading last at $52.58, which was higher by $1.42 in intraday activity.

By late afternoon, the Southwest convertibles and shares edged off their highs of the day, with the convertibles changing hands at about 148 while the stock was at about $52.70, which was up about 3%. However, the shares were still lower on the week by about 2%.

On Thursday, the Southwest convertible notes expanded 0.5 point on a dollar-neutral basis after being “all over the place” as the stock wavered between gains and losses. The notes changed hands at 148.5 versus a stock price of $51 shortly before the close on Thursday.

Low-cost airline JetBlue Airways Corp. saw its 0.5% convertibles due 2026 trade up a point on Friday to just over par. The bonds were at 100.025 when shares were about $16.46.

Booking Holdings Inc. also saw solid trading in a duo of convertible bonds as the underlying shares traded similarly to much of the market. The Booking stock hit a bit of a trough at late morning, but they were trading up from there for a 1.63% gain to $2,199.225 by late afternoon.

The more actively traded Booking 0.9% bonds due 2021 added an outsized 1.72 points to 107.716 by early afternoon and was up to 108.98 at late afternoon.

The Booking 0.75% bonds due 2025 were up just 0.2 point on the day to 141.5.

For the week, Booking’s shares were also lower, going out down nearly 1%. Losses on Thursday for it and other names in the tourism and travel sector took a hit on a flare of Covid-19 concerns as the Delta variant sweeps pockets of the world causing concerns the virus could hurt global economic growth. Tokyo announced this week that the Olympic games will get underway later this month without spectators due to concerns of virus spread.

Okta Inc.’s 0.375% convertibles due 2026 saw follow-on trade on Friday, with the notes bumping lower with the underlying shares after the issue added on Thursday, according to Trace data.

The notes, of which $1 billion priced in June 2020, traded at 126.44 early Friday, which was down a point on an outright basis and in tandem with lower shares, which were down 1% at late morning at $248.65.

The Okta convertibles traded off nearly a point compared to late Thursday when they changed hands at 127.22 and on Wednesday when they traded between 126 and 127. The stock rebounded however to close up 58 cents, or 0.2% on the day. For the week, the shares are also up. Company director Benjamin Horowitz sold 80,000 Okta shares on Tuesday. The shares were sold at an average price of $247.94, according to a filing with the Securities and Exchange Commission.

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Mentioned in this article:

Booking Holdings Inc. Nasdaq: BKNG

JetBlue Airways Corp. Nasdaq: JBLU

Okta Inc. Nasdaq: OKTA

Southwest Airlines Co. NYSE: LUV

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