Convertible bond trading muted amid geopolitical issues; Priceline active; GoPro gains ground

By Stephanie N. Rotondo

Seattle, April 11 – It was “extremely slow” in the convertible bond market on Tuesday, a trader said.

The low liquidity was due in part to its being Pesach, or Passover, which resulted in empty desks. Additionally, geopolitical concerns regarding the Middle East and the Korean Peninsula were troubling investors, which was putting pressure on equities.

But as far as convertibles went, “there’s nothing really moving a lot,” a trader said.

Priceline Group Inc.’s 0.9% convertible notes due 2021 took up a fair bit of the day’s trading, according to a market source. The paper was holding its ground around the 112 to 112.5 context, though the underlying stock was down $7.57, trading at $1,768.40.

On the equity side, the closing share price was better than the lows seen earlier in the session.

There was no fresh news out on the travel services provider to cause the movement in the convertibles or the equity.

One sellside source pointed out that the 0.9% convertibles were trading at a 31% premium and with a negative yield to maturity.

Meanwhile, GoPro Inc.’s $175 million of 3.5% convertible notes due 2022 – a deal priced on Friday – were called up about 4 points by one source. The source placed the paper at 106.5 bid, 107 offered.

However, there was a late-day trade at par.

The company’s shares meantime added 26 cents, or 2.99%, to close at $8.95.

The gains in the stock were attributed to the launch of the camera maker’s first trade-up program. The program offers existing GoPro owners $100 off a new Hero5 Black or $50 off a new Hero5 Session, if they trade in their older model.

MTS wanes on earnings

MTS Systems Corp.’s 8.75% tangible equity units were lower in the wake of the company’s earnings results late Monday.

A source called the units down over 14 points at 108.80.

The stock was also weaker, dropping $7.10, or 13.2%, to $46.70.

For the first fiscal quarter, the Eden Prairie, Minn.-based suppliers of test systems and industrial positions sensors reported a profit of $1.7 million, or 9 cents per share.

On an adjusted basis, EPS was 55 cents.

Revenue came to $199.3 million.

Analysts had forecast adjusted EPS of 61 cents on revenue of $207.5 million.

In its earnings release, the company said that it expects its 2017 fiscal earnings to show flat to lower results from its Test unit, but solid demand for its Sensors unit.

As such, it is forecasting full-year EPS to be between 80 cents and $1.20, with revenue ranging from $760 million to $790 million.

Mentioned in this article:

GoPro Inc. Nasdaq: GPRO

MTS Systems Corp. Nasdaq: MTSC

Priceline Group Inc. Nasdaq: PCLN

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