Morning Commentary: American Airlines convertible notes in focus on active morning

By Abigail W. Adams

Portland, Me., Jan. 18 – The convertibles primary market remained dormant early Wednesday with the window of opportunity for new deal activity narrowing.

However, the convertibles secondary space was active early in the session with indexes volatile after the latest round of economic data.

While indexes launched the day with strong gains, selling pressure took hold as the session progressed with indexes turning mixed.

The Dow Jones industrial average was down 6 points, or 0.16%, the S&P 500 index was down 0.16%, the Nasdaq Composite index was up 0.09% and the Russell 2000 index was up 0.28% shortly before 11 a.m. ET.

Trading activity was picking up in the secondary space with $120 million of convertibles on the tape about one hour into the session although few names saw concentrated activity.

American Airlines Group Inc.’s 6.5% convertible notes due 2025 were among the most actively traded issues in the secondary space with the notes moving higher alongside stock.

The 6.5% notes gained 2 points outright with stock up 2% before selling pressure took hold.

The notes were changing hands at 128.5 versus a stock price of $17.25 early in the session, according to a market source.

There was $10 million in reported volume.

American Airlines’ stock was trading at $16.99, a decrease of 0.52%, shortly before 11 a.m. ET.

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