Morning Commentary: Markets quiet, Akamai trades above par, but shouldn’t for long, sources say

By Abigail W. Adams

Portland, Me., Dec. 18 – The secondary market was off to a whimper Monday with trading activity expected to be light for the duration of the week, market sources said.

Akamai Technologies Inc.’s 0% convertible notes due 2019 jumped in an early trade to 101.873, according to Trace data. The notes were trading at 99 at market close Friday.

The Cambridge, Mass-based content delivery network and cloud service provider’s equity received a jolt on Friday when hedge fund Elliott Management disclosed it had taken a 6.5% stake in the company.

However, the rise in equity is not expected to have a sustained impact on the 0% convertible note, which has a delta of 9%, a market source said. With a conversion price of $89.56 and maturity a little more than a year away the convertible is “so far out of the money, it shouldn’t really move,” the source said.

“The reality is this is a good piece of straight debt,” the source said. The only reason it should trade above par is if the notes reach their conversion price in a year, the source said.

B. Riley analysts boosted Akamai’s target price for stock Monday to $85 from $70. Credit Suisse analysts boosted their target price for Akamai stock to $75 from $55. Both still fall short of the conversion price on the 0% note.

Akamai stock was up 13.56% in early trading Monday to $65.59.

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