Morning Commentary: Convertibles secondary market tone sours; Okta notes active early

By Abigail W. Adams

Portland, Me., Sept. 29 – It was a red morning in the convertibles secondary space with the market giving back its gains from the previous session as the rally in equities proved short-lived.

The surge in markets on Wednesday sparked by the Bank of England’s bond-buying intervention did little to quell the recession concerns that have dragged risk assets to multi-year and multi-decade lows.

The Dow Jones industrial average was down 541 points, or 1.81%, the S&P 500 index was down 2.36%, the Nasdaq Composite index was down 3.14% and the Russell 2000 index was down 3.12% shortly before 11 a.m. ET.

“Where’s the bottom?” is the question that many are asking.

However, the impact of the jump in interest rates on corporate balance sheets is just beginning to be realized, a source said.

Trading activity remained decent in the secondary space with $70 million in reported volume about one hour into the session.

However, there was a wide breadth to the names in play with few seeing concentrated trading activity.

Okta Inc.’s 0.125% convertible notes due 2025 were active with the notes continuing to trade near their all-time lows.

The notes were changing hands at 83.5 versus a stock price of $54.89 early in the session.

The yield on the notes was 6.43%.

Okta’s stock was seen at $55.40, a decrease of 0.52%, shortly before 11 a.m. ET.

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