Morning Commentary: DexCom, Insulet convertible notes active, level off after sell-off

By Abigail W. Adams

Portland, Me., Oct. 13 – The convertibles secondary space saw a quiet start to the session on Friday with equity markets mixed and Treasury yields declining as the big banks kick off earnings season.

While bank earnings were good, the market is still assessing rate risk with alarms sounding about their delayed impact on the economy.

“There’s a plus column and a negative column here,” a source said.

The Dow Jones industrial average was up 58 points, or 0.17%, the S&P 500 index was down 0.24%, the Nasdaq Composite index was down 0.71% and the Russell 2000 index was down 0.34% shortly before 11 a.m. ET.

There was $63 million in reported volume about one hour into the session with a wide range of names in play.

Diabetes management companies Insulet Corp.’s and DexCom Inc.’s convertible notes remained active although they were unchanged on the day after Ozempic shook up the sector.

DexCom’s 0.25% convertible notes due 2025 remained largely unchanged with the notes continuing to trade on a 91-handle.

The notes were trading at 91.625 early in the session with the yield about 4.5%, according to a market source.

There was $6 million in reported volume with the notes the most actively traded early in the session.

DexCom’s 0.375% convertible notes due 2028 were slightly improved in early trade with the notes trading up about 0.25 point outright to 83.25 with the yield also about 4.5%.

There was $5 million in reported volume.

DexCom’s convertible notes are heavily busted and have long traded for their yield.

While the shorter duration notes have held steady on a 91-handle as DexCom’s stock dropped, the 2028 notes have fallen about 2 points outright.

DexCom’s stock was trading at $75.26, a decrease of 0.32%, shortly before 11 a.m. ET.

Stock has fallen almost 9% over the past week.

Insulet’s 0.375% convertible notes due 2026 remained active with the notes rising alongside stock.

The notes were up about 0.875 point outright with stock up 1.5%.

Insulet’s 0.375% notes were changing hands at 92 versus a stock price of $132.14 early in the session.

There was $3 million in reported volume.

Insulet’s stock was trading at $129.90, an increase of 1.66%, shortly before 11 a.m. ET.

Stock has fallen more than 10% over the past week.

News that weight loss drug Ozempic proved effective as a treatment for kidney disease sparked a broad based sell-off in kidney treatment, medical device, and diabetes management companies over the past week.

However, the selling pressure showed signs of abating on Friday with several sources seeing the market reaction as overdone.

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