Morning Commentary: Convertibles secondary at half-mast; ZTO rises post-earnings

By Abigail W. Adams

Portland, Me., Nov. 23 – It was a quiet morning in the convertibles secondary space with the market at half-mast heading into the Thanksgiving holiday in the United States.

Few names were on the tape and even fewer saw concentrated trading activity with not much expected from the session.

“Anyone who wanted to do something already did it,” a source said.

Equity indexes added to their gains early Wednesday as the market awaited the release of the Federal Open Market Committee meeting minute notes at 2 p.m. ET.

The Dow Jones industrial average was up 80 points, or 0.24%, the S&P 500 index was up 0.58%, the Nasdaq Composite index was up 1.10% and the Russell 2000 index was up 0.43% shortly before 11 a.m. ET.

ZTO Express’ 1.5% convertible notes due 2027 were the major movers of the session with the notes gaining on an outright basis after a positive earnings report.

The notes gained about 2 points outright with the company’s equity up about 4%.

The convertibles were marked at 95.75 bid, 96 offered in early trade, a source said.

However, the notes were moving in line on a dollar-neutral, or hedged, basis.

ZTO’s American Depositary Shares were changing hands at $23.23, an increase of 4.08%, shortly before 11 a.m. ET.

The Shanghai-based express delivery service reported a large earnings beat after the market close on Tuesday with earnings per share of $2.34 versus the $1.92 expected.

Revenue was $8.94 billion versus the $8.95 billion expected.

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