Cleveland-Cliffs convertibles in focus post-earnings; SSR Mining notes add to gains

By Abigail W. Adams

Portland, Me., July 19 – The convertibles secondary space was at a crawl on Friday with activity surrounding the new deals to price over the past week slowing down.

There was about $50 million on the tape a little over one hour into the session with volume remaining light into the afternoon, sources said.

With attention shifting away from new issues, mining names were in focus and making gains.

Sources attributed the recent momentum in mining names in part to the “the gold play” and in part to the sector playing catch up to the rest of the market, which has been on the rise in recent weeks.

Cleveland-Cliffs Inc.’s 1.5% convertible notes due 2025 were among the most actively traded issues in the secondary space with the notes up on both an outright and dollar-neutral basis.

SSR Mining Inc.’s convertible notes were again active in the secondary space with the notes continuing their upward momentum.

Cleveland-Cliffs in focus

Cleveland-Cliffs’ 1.5% convertible notes due 2025 were among the most actively traded issues in the secondary space on Friday with the notes up on both an outright and dollar-neutral basis after an earnings beat.

The 1.5% notes were up as much as 7 points outright to trade upward of 154 during Friday’s session, according to a market source.

The notes were trading within a tight bid, ask range. They were expanded about 0.25 point dollar-neutral, a market source said.

There was more than $15 million in reported volume during Friday’s session.

Cleveland-Cliffs’ stock jumped following a top- and bottom-line earnings beat.

Stock traded as high as $11.61 before closing the day at $11.30, an increase of 3.96%.

The Cleveland-based iron ore mining company reported earnings per share of 63 cents versus analyst expectations for earnings per share of 52 cents.

The company reported revenue of $743 million, which also beat analyst expectations.

SSR Mining gains

SSR Mining’s convertible notes were again active in the secondary space with multiple buyers driving momentum in the name.

Holders were also switching between the equity-sensitive convertible note and the more bond-like convertible note, a market source said.

The 2.5% convertible notes due 2039 again reached new heights on an outright basis.

The 2.5% notes were up another 3 points outright to trade just shy of 116 on Friday.

More than $7 million of the bonds were in play during the session.

The 2.5% convertible notes were also active on Thursday and hit a new high at 113.

The 2.875% convertible notes due 2033 were changing hands at 101.875 early in the session and traded north of 102 in the afternoon.

Both issues were up about 1 point dollar-neutral, a market source said.

SSR Mining stock traded as high as $16.11 before coming in to close the day at $15.86, an increase of 0.76%.

The gold play

Mining names have been in focus over the past two sessions, which sources attributed to “a gold play.”

If the economy starts to show signs of weakness, then gold and other commodities will run.

“This is a great place to hedge the rest of the books,” a market source said.

Until recently, the mining sector has not seen the upward momentum other sectors in the convertibles universe have.

While the tech sector and biotech sector have been on the rise, mining names have remained largely flat.

The recent momentum in the sector may also be the result of a game of catch up with buyers becoming involved in mining names on the assumptions they are due to rise like the rest of the market has.

Mentioned in this article:

Cleveland-Cliffs Inc. NYSE: CLF

SSR Mining Inc. Nasdaq: SSRM

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