Morning Commentary: Ensco convertibles eyed as crude oil futures bounce; Square active

By Abigail W. Adams

Portland, Me., Jan. 4 – There was an uptick in convertibles trading volume early in Friday’s session as equity markets rebounded from a brutal decline on Thursday.

About $60 million was on the tape early in Friday’s session with Ensco plc’s 3% convertible notes due 2024 leading the volume charts.

The notes jumped 2.5 points outright to trade up to 72 with the yield now 10.20%, a market source said. About $8 million of the bonds were on the tape early in the session.

The notes are a yield play with the primary question being whether or not the company is viable, the source said.

Ensco has been under pressure with the 3% notes collapsing alongside crude oil futures in the fourth quarter. The notes closed 2018 at 64.75, the source said.

They were trading north of par prior to the sell-off in crude oil in mid-October.

However, the notes have been active and making gains throughout the week as crude oil futures rebounded.

The barrel price of WTI crude oil continued its upward momentum early in Friday’s session jumping 4% to $49.

Square Inc.’s 0.5% convertible notes due 2023 were also active early in Friday’s session. The notes were making gains on an outright basis.

The notes gained 3 points outright to trade up to 105 as stock surged alongside the broader markets. Square stock rose to $58.00, an increase of 10.79%, early Friday.

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