Morning Commentary: Convertibles secondary active at month’s end; Akamai notes gain

By Abigail W. Adams

Portland, Me., Aug. 31 – It was an active start to the day in the convertibles secondary space on Thursday with equity indexes notching continued gains on the heels of the latest Personal Consumption Expenditures report, which came in line with expectations.

The Dow Jones industrial average was up 97 points, or 0.28%, the S&P 500 index was up 0.26%, the Nasdaq Composite index was up 0.44% and the Russell 2000 index was up 0.47% shortly before 11 a.m. ET.

There was $70 million on the tape about one hour after the opening bell, a notable uptick from previous sessions, with end-of-month clean up a driving force of the trading volume.

Akamai Technologies Inc.’s 1.125% convertible notes due 2029 continued to gain steam in active trade after a lackluster start in the secondary space.

The 1.125% notes were up about 0.25 point outright with stock up 0.5% early in the session.

The convertibles were changing hands at 101 versus a stock price of $105.20, according to a market source.

The notes were the most active in the secondary space with $7 million in reported volume.

Akamai’s stock was trading at $105.30, an increase of 0.70%, shortly before 11 a.m. ET.

The 1.125% convertible notes have underperformed since hitting the secondary space on Aug. 16.

The notes broke above par for the first time since their aftermarket debut earlier in the week.

However, while they have gained outright, they remain flat to slightly contracted on a dollar-neutral, or hedged, basis, a source said.

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