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Morning Commentary: Convertibles secondary at a crawl as equities rise; DISH active
By Abigail W. Adams
Portland, Me., Oct. 16 – The convertibles primary market was dormant and the convertibles secondary space at a crawl early Monday with equity markets strong despite continued weakness in the bond market.
Equity indexes launched the week strong in the absence of bad news and with attention turning toward earnings.
The Dow Jones industrial average was up 357 points, or 1.08%, the S&P 500 index was up 1.16%, the Nasdaq Composite index was up 1.19% and the Russell 2000 index was up 1.41% shortly before 11 a.m. ET.
There was $43 million in reported volume about one hour into the session with no name seeing more than $3 million in reported volume, a source said.
DISH Network Corp.’s 0% convertible notes due 2025 (Caa2/CCC-) were among the most active issues early in the session with the notes continuing to weaken.
The notes were unchanged on a strong start for stock with the 0% convertible notes changing hands at 63.5, according to a market source.
The yield was 5.08%.
There was $3 million in reported volume.
DISH’s stock was changing hands at $5.10, an increase of 1.39%, shortly before 11 a.m. ET.
DISH’s capital structure has taken a hit over the past two weeks after the company announced that it was reversing its role in the EchoStar merger with EchoStar to serve as the parent company with DISH the subsidiary.
DISH’s soon-to-mature 2.375% convertible notes due March 15, 2024 were unchanged following the Oct. 3 announcement with the market expressing confidence the notes would be paid upon maturity, a source previously said.
However, its longer dated notes and straight debt took a hit following the news with the longer-term prospects for the company less than certain.
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