Morning Commentary: Envista convertible notes active on quiet morning; Nabors climbs

By Abigail W. Adams

Portland, Me., Feb. 14 – It was another slow start to the day in the convertibles secondary space with equities volatile following the release of the latest U.S. Consumer Price Index report.

The report came in hotter-than-expected with an all-items increase of 6.4% versus the 6.2% expected and a core CPI reading of 5.6% versus the 5.5% expected.

Equity indexes opened in the red, popped into positive territory in the first hour of trading, but slipped back to losses as the session progressed.

While equity indexes wavered between gains and losses early in the session as investors digested the data, the price movement was muted with moves of less than 1% in either direction.

The Dow Jones industrial average was down 255 points, or 0.74%, the S&P 500 index was down 0.52%, the Nasdaq Composite index was down 0.41% and the Russell 2000 index was down 0.55% shortly before 11 a.m. ET.

Trading activity in the secondary space remained muted with $60 million in reported volume about one hour into the session.

Envista Holdings Corp.’s 2.375% convertible notes due 2025, an off-the-run issue that rarely makes an appearance on the tape, was among the top traded issues early in the session.

The deep-in-the-money notes were moving alongside stock, a source said.

They were changing hands at 196.75 versus a stock price of $39.92 early in the session.

There was $5 million in reported volume.

Envista’s stock was trading at $40.23, an increase of 0.47%, shortly before 11 a.m. ET.

Nabors Industries, Inc.’s recently priced 1.75% convertible notes due 2029 continued their upward momentum in early trade.

The notes were seen at 110 versus a stock price of $174 early in the session.

There was $3 million in reported volume.

Nabors’ stock was trading at $174.90, an increase of 0.95%, shortly before 11 a.m. ET.

The 1.75% notes, which priced at par in an overnight deal last Thursday, have skyrocketed since hitting the secondary space with the notes expanded about 7.5 points dollar-neutral since pricing.

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