Morning Commentary: Convertibles market awaits Fed decision; Extra Space ‘holding in’ around par

By Rebecca Melvin

New York, Sept. 17 – U.S. convertibles were quiet early Thursday as market players awaited the closely watched Federal Reserve interest rate decision expected at 2 p.m. ET.

“It’s really been quiet ahead of the Fed,” a New York-based trader said.

Extra Space Storage Inc.’s 3.125% exchangeables, which debuted in the market on Wednesday, remained right around par. They were quoted at par to 100.25 with the common stock around $74.40.

“They are holding in around par,” a trader said.

The new paper traded actively Wednesday after the Salt Lake City-based real estate investment trust priced $500 million of the 20-year senior notes at the cheap end of talked terms.

Equity markets opened lower ahead of the Fed decision and traded narrowly mixed. The S&P 500 stock index was positive by 0.23 point at 1,995.56. The Dow Jones industrial average was negative by just a couple of points, and the Nasdaq Stock index was up by 10 points, or 0.2%.

In data early Thursday, the number of new filings for jobless claims was down, hitting an eight-week low. Initial claims dropped to 264,000 last week, from 275,000. The labor market data continues to suggest some health, but the inflation rate is well below the Fed’s 2% target for taking away accommodation.

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