Liberty Media exchangeables rise; Array lower outright; PennyMac weaker in active trade

By Abigail W. Adams

Portland, Me., Oct. 16 – The convertibles primary market was dormant and the convertibles secondary space at a crawl on Monday with equity markets strong despite continued weakness in the bond market.

Equity indexes saw a strong start to the week in the absence of bad news and with attention turning toward earnings.

The Dow Jones industrial average closed Monday up 314 points, or 0.93%, the S&P 500 index closed up 1.06%, the Nasdaq Composite index closed up 1.2% and the Russell 2000 index closed up 1.59%.

There was $43 million in reported convertibles trading volume about one hour into the session and $290 million in the late afternoon with few names seeing more than $10 million in reported volume.

American Water Capital Corp.’s 3.625% exchangeable senior notes due 2026 (Baa1/A) saw the heaviest volume of the session with the notes stronger outright alongside stock.

Array Technologies Inc.’s 1% convertible notes due 2028 were lower alongside stock in active trade with the notes improving dollar-neutral on the move down.

Liberty Media Corp.’s 2.375% exchangeable notes due 2053 for Live Nation Entertainment Inc.’s stock climbed further above par on a strong day for stock although the notes were largely unchanged dollar-neutral.

PennyMac Corp.’s 5.5% exchangeable notes due 2026, an off-the-run issue that rarely trades in volume, were weaker in active trade on Monday.

While activity in the name tempered as the session progressed, DISH Network Corp.’s 0% convertible notes due 2025 (Caa2/CCC-) were active early with the notes unchanged after an extended downtrend.

American Water in focus

American Water’s 3.625% exchangeable notes due 2026 saw the heaviest volume of Monday’s session with the notes stronger alongside stock.

The 3.625% notes added 0.375 point outright with stock up more than 1%.

They were trading just shy of 97 versus a stock price of $119.46 in the late afternoon.

There was $16 million in reported volume.

American Water’s stock traded to a low of $117.04 and a high of $120.04 before closing at $119.98, an increase of 1.64%.

Array down outright

Array Technologies’ 1% convertible notes due 2028 were lower outright on a red day for stock although the notes improved dollar-neutral on the move down, sources said.

The 1% notes traded off 1.75 points outright with stock down more than 7% in intraday activity.

The notes were changing hands at 103.25 versus a stock price of $18.66 in the late afternoon, according to a market source.

The notes were stronger on hedge.

There was $9 million in reported volume.

Array’s stock traded to a low of $18.02 and a high of $19.64 before closing at $18.67, a decrease of 3.96%.

Liberty Media climbs

Liberty Media’s 2.375% exchangeable notes for Live Nation’s stock climbed further above par on a strong day for stock.

The 2.375% notes climbed about 1 point outright with stock up 1.5%.

The notes were trading at 101.625 versus a stock price of $86 in the late afternoon, according to a market source.

The notes were largely moving in line dollar-neutral.

There was $10 million in reported volume.

Live Nation’s stock traded to a low of $84.60 and a high of $86.08 before closing at $85.58, up 1.22%.

Liberty Media’s 2.375% notes have been volatile with the $1 billion issue wavering between outright gains and losses since pricing at par on Sept. 6.

The notes were trading on a 99-handle in early October but popped back above par last week.

PennyMac weaker

PennyMac’s 5.5% exchangeable notes due 2026 were weaker in active trade on Monday.

The notes were off about 1.5 points outright.

There were changing hands at 89.75 in the late afternoon, according to a market source.

The yield was about 10.375%.

There was $8 million in reported volume.

The REIT’s exchangeable notes are heavily busted and have long traded for their yield, a source said.

However, PennyMac’s stock closed Monday at $11.74, an increase of 2.35%.

DISH unchanged

While activity in the name petered out as the session progressed, DISH’s 0% convertible notes due 2025 were active early in the session.

The notes were largely unchanged as stock wavered between gains and losses.

The 0% notes were trading at 63.75 versus a stock price of $4.99 in the late afternoon, according to a market source.

The yield was about 22%.

There was $4 million in reported volume.

DISH’s stock traded to a low of $4.95 and a high of $5.15 before closing at $4.96, down 1.39%.

DISH’s capital structure has taken a hit over the past two weeks after the company announced that it was reversing its role in the EchoStar merger with EchoStar to serve as the parent company with DISH the subsidiary.

DISH’s soon-to-mature 2.375% convertible notes due March 15, 2024 were unchanged following the Oct. 3 announcement with the market expressing confidence the notes would be paid upon maturity, a source previously said.

However, its longer dated notes and straight debt took a hit following the news with the longer-term prospects for the company less than certain.

Mentioned in this article:

American Water Works Co., Inc. NYSE: AWK

Array Technologies Inc. Nasdaq: ARRY

DISH Network Corp. Nasdaq: DISH

Live Nation Entertainment Inc. NYSE: LYV

PennyMac Mortgage Investment Trust NYSE: PMT

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