Morning Commentary: Illumina convertible notes active; Dycom Industries reverses course

By Abigail W. Adams

Portland, Me., March 25 – There was an uptick in trading activity in the convertibles secondary space early in Wednesday’s session with investors digesting the details of Congress’ $2 trillion stimulus bill, which is expected to pass by the end of the day.

Equities wavered between gains and losses early in the session. The Dow Jones industrial average was up 1.61%, the S&P 500 index was up 0.27% and the Nasdaq composite was down 0.28% shortly before 11 a.m. ET.

There was $74 million in reported volume about one hour into Wednesday’s session.

Illumina Inc.’s 0% convertible notes due 2023 saw high-volume activity with more than $21 million in reported volume about one hour into the session.

The 0% convertible notes due 2023 were trading off their lows.

However, they were still changing hands at unheard of prices for investment-grade paper, a market source previously said.

The 0% notes were changing hands at 93.125 early in the session with stock down 2%.

Illumina stock was $248.05, a decrease of 2.41%, shortly before 11 a.m. ET.

The notes bottomed out at 90 late last week.

While the notes have improved in recent sessions, they were still contracted several points from their highs, sources said.

Dycom Industries Inc.’s 0.75% convertible notes due 2021 were also active early in Wednesday’s session with the notes reversing course after Tuesday’s rebound.

The 0.75% notes dropped 6.5 points outright to 81.5 early Wednesday, according to a market source.

The notes were changing hands at 81.5 shortly before 11 a.m. ET with more than $8 million in reported volume.

The credit sensitive name jumped more than 12 points outright on Tuesday as credit spreads tightened and credit markets thawed.

Dycom also announced on Tuesday plans to repurchase up to $157 million in principal of the 0.75% notes for $138 million in privately negotiated transactions, Prospect News reported.

The 0.75% notes have $485 million outstanding, according to Trace data.

© 2015 Prospect News.
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