Morning Commentary: Calm waters on Monday morning for convertible early trading

Chicago, July 17 – The convertible bond new issue market appeared to be quiet on Monday morning as the July 17 week got underway.

Banks started reported earnings on Friday, but Monday was expected to be a slow day for new announcements with more news expected on Tuesday, and in the lull, the equity markets were behaving and running nearly flat before lunch.

The S&P 500 index, the Nasdaq-100 index and the Dow Jones industrial average were all modestly up around 11 a.m. ET.

Carnival active

Generally, single stock names were not making outsized moves in the early going.

In the calm waters, Carnival Corp.’s stock was modestly up on Monday morning at over 2%, a rebound from an off day on Friday.

The company’s convertible bonds were also making a recovery from some lower trades late last week.

Carnival’s 5.75% convertible senior notes due Dec. 1, 2027 were coming back from a Friday dip in the 155 zone.

They started July post-Independence Day in the mid-167 zone and have been steadily moving below 160, finally entering it on July 13. On Friday, the notes sank to 155.56 in modest trading action. A few trades had them on the board back in the mid-158 area on Monday morning.

Similarly, the company’s 5.75% convertible bonds due Oct. 1, 2024 suffered on Friday, breaking below 190, a level not seen since late June.

An early trade still put them at 188 in the early going on Monday, but recovering from where they were in a low Friday trade.

Rising tides were not lifting all cruise ships.

Royal Caribbean Cruises Ltd.’s stock was up 1.14% on Monday after 11 a.m. ET, but the company’s bonds were at best flat or not really moving.

Zscaler in focus

Zscaler Inc. was primed for a good day.

The San Jose, Calif.-based digital protection company was a top gainer in the early session, with stock up over 3.5%, marked at $150.69 per share.

The company’s 0.125% convertible bonds due July 1, 2025 were benefitting.

The bonds had a down week throughout all of last week but were recovering from a weekly low in the mid-112 range on Wednesday last week.

The notes were noted on either side of 119 in a couple trades on the board Monday morning.

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