Morning Commentary: High-grade convertible notes weaken as GDP print sparks selling

By Abigail W. Adams

Portland, Me., April 25 – The convertibles secondary space was quiet early Thursday as the latest GDP print sparked heavy selling in markets.

Equity indexes slumped as Treasury yields climbed with a much softer-than-expected rate of economic growth reawakening recession fears, a source said.

The Dow Jones industrial average was down 686 points, or 1.78%, the S&P 500 index was down 1.43%, the Nasdaq Composite index was down 1.85% and the Russell 2000 index was down 1.54% shortly before 11 a.m. ET.

There was $74 million in reported volume about one hour into the session with investment-grade issues dominating the tape.

High-grade names were under pressure as Treasury yields climbed with the two-year yield again surpassing 5%.

Rexford Industrial Realty, LP’s two tranches of exchangeable notes (Baa2/BBB+/BBB+) were again lower after firming earlier in the week.

The 4.125% exchangeable notes due 2029 were off about 0.75 point outright.

They were trading at 95.75 versus a stock price of $42.12 early in the session, a source said.

There was $6 million in reported volume.

The 4.375% exchangeable notes due 2027 traded down to 96.875.

There was $2 million in reported volume.

Rexford’s stock was trading at $42.24, a decrease of 0.71%, shortly before 11 a.m. ET.

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