DISH slips amid rate concerns as market adjusts to surprise Trump victory; Weatherford adds

By Rebecca Melvin

New York, Nov. 10 – U.S. convertibles traded actively on Thursday with pricing mixed as some key names took the day’s center stage.

DISH Network Corp.’s convertibles were lower on a swap basis as interest-rate concerns troubled investors on the heels of Donald Trump’s surprise victory in the U.S. presidential election on Tuesday. The Republican candidate won despite most polls indicating that Democratic nominee Hillary Clinton was the front-runner of the race.

“DISH is down on a [potential] rate move. It’s a 10-year bond and rates have been ripping around. People don’t want to hold it, or they want to hold less of it,” a New York-based sellsider said.

Other rate-sensitive names like real estate investment trusts were also in focus on Thursday, but there wasn’t a lot of trading in the convertible issues of that sector as investors took a “wait and see” stance, market sources said.

“They don’t want to make the wrong move,” a sellsider said, adding that most market players are only trimming or shifting things toward where they think the right hedge might be.

The expectation is that the Trump administration is going to be a little more aggressive on upward moves on rates, a trader said.

DISH Network’s 3.375% convertible notes due 2026 were quoted at 112.75 bid, 113 offered versus an underlying share price of $57.93. The bond was down about 0.25 on swap. Shares of the Englewood, Colo.-based media company settled at $56.38, which was down 27% on the day.

Intel Corp. was active, as usual, a second New York-based trader said. The Intel 3.25% convertible due 2039 was so busy that it stood at the top of the Trace data volume chart, but pricing was essentially unchanged. The Intel bond traded last at 171.27 with the stock for the Santa Clara, Calif.-based chipmaker slipping a quarter, or 0.7%, to $34.50.

Weatherford International Ltd. was active and traded up again for a second straight day after the Houston-based oilfield-services provider announced that its chairman and chief executive, Bernard J. Duroc-Danner, is stepping down following a troubled period for the business, including accounting problems, higher debt and low oil prices.

“It definitely did better, post news,” a New York-based trader said of the Weatherford convertible late Thursday.

The Weatherford 5.875% convertible notes traded last at about 106.5, which was up 2 points on the day, and following an 11-point surge in the convertible on Wednesday when the shares popped 33%. On Thursday, Weatherford shares were up another penny to $5.07.

Overall, convertible issues in the energy space were “OK,” a sellsider said. “It is hanging in there.”

Encore Capital Group Inc. gained as the common shares of the San Diego, Calif.-based financial services company surged $6.70, or 35%, to $26.05 after reporting positive third-quarter earnings. Encore is a debt management company. The Encore 3% convertibles were indicated up to 104 from 96.7, according to a pricing source.

Another name in trade was Avid Technology Inc., and those bonds were seen around 68, which was probably 5 or 6 points lower compared to where the dollar-neutral price would be, a New York-based trader said at late morning.

Avid shares dropped on lowered guidance. Avid shares were down $1.80, or 28.5%, to $4.52.

Overall, the market for U.S. convertibles was described as “status quo.” There was mixed and fairly active trade, but “nothing really stands out,” a sellsider said.

On Wednesday, health care names were seeing a bid, but there was not a lot of follow-through in the sector on Thursday.

Meanwhile, the new issue market remained quiet as has been the case for all of November, and there was no indication that the situation will change soon, a sellsider said.

The primary market has been “non-existent, and there are no whispers of anything coming soon,” a sellsider said.

In the broader markets, the Dow Jones industrial average closed up at another record high on Thursday, gaining 218.19 points, or 1.25%, to 18,807.88 on the day, while the S&P 500 stock index added 4.22 points, or 0.2%, to 2,167.48, and adding to a gain of about 4% for the week. But the Nasdaq Composite dropped 42.28 points, or 0.8%, to 5,208.80 as the technology sector fell. Still the Nasdaq Biotechnology index added 1.6% on the day.

Mentioned in this article:

Avid Technology Inc. Nasdaq: AVID

DISH Network Corp. Nasdaq: DISH

Encore Capital Group Inc. Nasdaq: ECPG

Intel Corp. Nasdaq: INTC

Weatherford International Ltd. NYSE: WFT

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