Morning Commentary: Carnival, Fiverr convertible notes active as equities wobble

By Abigail W. Adams

Portland, Me., Jan. 26 – While the convertibles primary market remained dormant on Thursday with expectations for new deal activity low, the secondary space remained active as accounts continued to put money to work in the market.

Equity indexes were mixed in early trading as investors digested the latest earnings and a higher-than-forecast GDP print.

The Dow Jones industrial average was down 61 points, or 0.17%, the S&P 500 index was up 0.07%, the Nasdaq Composite index was up 0.41% and the Russell 2000 index was down 0.04% shortly before 11 a.m. ET.

Investors briefly responded positively to Tesla Inc.’s earnings and GDP data that reflected a slower economic slowdown than anticipated with the Nasdaq logging more than 1% gains in the first hour of trading.

However, investors remained recession-wary even with the GDP print giving some credence to the soft-landing Federal Reserve officials hope for.

There was $96 million in reported convertibles trading volume about one hour into the session with a wide range of names in play.

Carnival Corp.’s 5.75% convertible notes due 2027 were among the most actively traded issues early in the session.

The notes were lower alongside stock.

The convertibles were changing hands at 110.75 versus a stock price of $10.73 early in the session, according to a market source.

Reported volume in the issue reached $7 million.

Carnival’s stock was seen at $10.68, a decrease of 1.79%, shortly before 11 a.m. ET.

While slightly lower on Thursday, the notes traded up to 111, their highest outright level since pricing, the previous session.

Fiverr International Ltd.’s 0% convertible notes due 2025 also saw some action early Thursday although with little movement in price.

The 0% convertible notes were trading at 84.875 early in the day with the yield about 6%, according to a market source.

There was $6 million in reported volume.

Fiverr’s stock launched the day with gains but turned negative as the session progressed and was changing hands at $34.67, a decrease of 1.84%, shortly before 11 a.m. ET.

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