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Morning Commentary: DISH convertible notes gain on asset sale; Illumina active early
By Abigail W. Adams
Portland, Me., May 25 – It was a quiet day in the convertibles secondary space with activity expected to continue to dwindle as the long holiday weekend in the United States approaches.
Equity indexes were mixed early in the session as investors weighed debt ceiling negotiations against blowout earnings from the bellwethers of tech.
Nvidia Corp.’s earnings propelled the tech-heavy Nasdaq to a more than 1% gain in early trading while value and small-cap stocks underperformed.
The Dow Jones industrial average was down 70 points, or 0.21%, the S&P 500 index was up 0.62%, the Nasdaq Composite index was up 1.39% and the Russell 2000 index was down 0.83% shortly before 11 a.m. ET.
There was $76 million in reported convertible bond trading volume about one hour into the session.
Illumina Inc.’s soon-to-mature 0% convertible notes due Aug. 18, 2023 (BBB) accounted for the lion’s share of activity in the space with the notes changing hands as their end of life approaches.
The 0% notes were seen at 98.25 for a yield of about 8½%, according to a market source.
There was $14 million in reported volume.
While volume was light, DISH Network Corp.’s beleaguered convertible notes (B3/CCC-) were making large gains following media reports that the company was in talks to sell wireless plans through Amazon.
DISH’s soon-to-mature 2.375% convertible notes due March 15, 2024 rose 2.5 points on the news.
They were changing hands at 87.25 early in the session with a yield of 20.625%, according to a market source.
The 0% convertible notes due 2025 rose 2 points to 46.5 with the yield about 32.375%
DISH’s stock was trading at $6.86, an increase of 10.19%, shortly before 11 a.m. ET.
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