Morning Commentary: Convertibles secondary ‘dead’; Splunk active; National Vision gains

By Abigail W. Adams

Portland, Me., Nov. 10 – Markets were open on Friday with no closures to observe the Veteran’s Day holiday in the United States, which falls on Saturday.

However, it did not seem like it.

“It’s dead,” a source said. “Nothing is moving.”

Equity indexes were mixed in early trade after the sell-off of the previous session.

The Dow Jones industrial average was up 134 points, or 0.39%, the S&P 500 index was up 0.54%, the Nasdaq Composite index was up 0.85% and the Russell 2000 index was down 0.06% shortly before 11 a.m. ET.

There was $50 million in reported volume about one hour into the session with few names on the tape and little movement in the names that did trade.

Splunk Inc.’s 1.125% convertible notes due 2025 were the top traded issue in the space although with little change in price.

The 1.125% notes were wrapped around 107.6 in early trade.

There was $6 million in reported volume.

Splunk’s stock was changing hands at $146.52, a decrease of 0.017%, shortly before 11 a.m. ET.

Splunk’s 1.125% convertible notes due 2025 have largely traded on a 107-handle since Cisco Systems Inc. announced its acquisition of the company for $157 per share in an all-cash transaction in September.

The deal is expected to close in the third quarter of 2024.

Splunk recently announced it was laying off about 7% of its workforce in preparation for the acquisition.

National Vision Holdings Inc.’s 2.5% convertible notes due 2025 also saw some activity after the company announced a $100 million buyback of the notes.

The company announced it had entered into privately negotiated transactions with certain holders of the 2.5% notes to repurchase $100 million in principal for $99.25 million.

Approximately $302.5 million in principal will remain outstanding following the completion of the buyback, according to a company press release.

The buyback price was “hefty” and lifted the 2.5% notes with holders anticipating additional buybacks, a source said.

The 2.5% notes gained 2 points outright to trade at 97.

There was $4 million in reported volume.

National Vision’s stock was trading at $18.69, an increase of 7.79%, shortly before 11 a.m. ET.

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