Morning Commentary: Convertibles secondary quiet; Euronet, Western Digital notes active

By Abigail W. Adams

Portland, Me., March 28 – It was a quiet start to the day in the convertibles secondary space with equity markets mixed as the 10-year Treasury yield came in after hitting its highest level in three years.

The tech sector led stock market advances while small caps led declines early in Monday’s session.

The Dow Jones industrial average was down 173 points, or 0.50%, the S&P 500 index was up 0.09%, and the Russell 2000 index was down 0.69% shortly before 11 a.m. ET.

While coming in from its heights, the Nasdaq Composite remained positive and was up 0.31% shortly before 11 a.m. ET.

The 10-year treasury yield was hovering around its low of the day of 2.419% after climbing as high as 2.547% early Monday.

There was $52 million in reported volume about one hour after the market open with few names seeing concentrated trading activity.

Investment-grade convertible notes were in focus with Euronet Worldwide Inc.’s 0.75% convertible notes due 2049 (BBB) and Western Digital Corp.’s 1.5% convertible notes due 2024 the only two issues to see more than $5 million in reported volume.

Euronet Worldwide’s 0.75% convertible notes were down slightly on an outright basis alongside stock.

The notes were changing hands at 110.5 versus a stock price of $125.24 early in the session.

There was about $6.5 million in reported volume; however, the trade sizes were chunky with only three trades on the tape, according to a market source.

Euronet’s stock was changing hands at $125.66, a decrease of 0.33%, shortly before 11 a.m. ET.

Western Digital’s 1.5% convertible notes due 2024 (Baa3) were also active early in the session.

The notes were changing hands at 96.75.

There was $5.5 million in reported volume.

Western Digital’s convertible notes are not equity sensitive and trade largely for their yield, which was 3.339% early Monday.

However, stock traded down to $50.26, a decrease of 1.08%, shortly before 11 a.m. ET.

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