Convertibles market quiet as accounts close the books on standout year; DISH rebounds

By Abigail W. Adams

Portland, Me., Dec. 24 – ‘Twas the day before Christmas and all through the convertibles market few creatures were stirring, including recent issues.

The convertibles secondary space’s slow pace over the past week ground to a practical standstill on Thursday.

There was $28 million in reported volume about one hour into the session and $79 million on the tape about one hour before the 1 p.m. ET early market close.

End-of-year activity was the driving force of activity in the space with little notable movement in the names that did trade, a source said.

Macquarie Infrastructure Corp.’s 2% convertible notes due 2023 saw some activity after the company announced a special dividend payment.

DISH Network Corp.’s 0% convertible notes due 2025 continued to improve dollar-neutral, reversing its previous trend.

Shift4 Payments Inc.’s 0% convertible note due 2025 saw some minor gain with stock up early in the session.

The activity closes out a quiet week with the week ahead expected to be equally as quiet as accounts close the books on 2020 – a year that shattered records and gave new meaning to the word volatility.

In the past year, the convertibles market saw the most new issuance in at least two decades and the highest returns in recent history as the economy logged the quickest meltdown and snap-back recovery on record.

The market saw $112.55 billion price over 202 deals – the largest amount since the inception of the Prospect News database in 2001.

Year-to-date returns for the Bloomberg Barclays U.S. Convertible Securities ETF were 52.48% as of Dec. 21.

The HFRX Convertible Arbitrage index boasted returns of 14.84% by mid-December.

Macquarie active

Macquarie’s 2% convertible notes due 2023 were active after the company announced a special dividend payment.

The notes traded as high as par in light volume with a few million plus prints at 99.9 in the late afternoon, according to Trace data.

The notes were in focus after Macquarie announced a special dividend payment of $11 to shareholders following the completed sale of its tank terminals business for $2.67 billion.

Dividend protection is a common covenant in convertible bonds with the conversion rate adjusted for dividends above a specified amount.

However, the 2% convertible notes are not equity sensitive and the dividend payment did not affect their valuation, a source said.

There is speculation the company will tender for the notes.

DISH improves

DISH’s 0% convertible notes due 2025 continued to improve on Thursday.

While the notes remained on a 98-handle, they expanded another 0.25 point dollar-neutral.

DISH’s stock traded to a low of $30.49 and a high of $31.08 before closing the day at $31.06, an increase of 0.26%.

The notes were also up 0.5 point on Wednesday, reversing the downward trend seen since they hit the aftermarket on Dec. 17.

Shift4 trades

Shift4 was one of the few names early in the session to move more than 0.125 point in trade, a source said.

The 0% convertible notes were changing hands at 119.625 with stock up a little more than 1%.

Shift4’s stock traded to a high of $73.26 and a low of $71.62 before closing the day little changed at $71.79, a decrease of 0.097%.

Mentioned in this article:

DISH Network Corp. Nasdaq: DISH

Macquarie Infrastructure Corp. NYSE: MIC

Shift4 Payments Inc. NYSE: FOUR

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