Marriott Vacations convertibles gain; DISH notes higher in heavy volume; Insulet lifted

By Abigail W. Adams

Portland, Me., Dec. 13 – The convertibles primary market remained dormant on Tuesday with only a few sessions left before the window for new deal activity closes for the year.

There was heard to be a deal in the pipeline, although sources were surprised to not see it launch.

Meanwhile, it was a strong start to the day in the convertibles secondary space as risk assets surged on the back of November’s Consumer Price Index report, which came in below forecasts.

However, the market came in as selling pressure dragged indexes lower.

“It looked like things were going to be super rosy,” a source said.

However, as soon as the S&P 500 hit 4,196, markets reversed.

After trading up more than 3% at the open, equity indexes closed with less than 1% gains.

The Dow Jones industrial average closed Tuesday up 104 points, or 0.30%, the S&P 500 index closed up 0.73%, the Nasdaq Composite index closed up 1.01% and the Russell 2000 index closed up 0.76%.

“Things were a little better,” a source said of the secondary space. “But you would think it would have been a lot better with the moves in the market.”

There was an uptick of trading activity in the secondary space as convertible issuers saw huge stock moves.

There was $92 million in reported volume about one hour into the session and $463 million on the tape about one hour before the market close.

Marriott Vacations Worldwide Corp.’s recently priced 3.25% convertible notes due 2027 were in focus with the notes returning to the outright heights seen after breaking for trade.

DISH Network Corp.’s 3.375% convertible notes due 2026 (B2/CCC) continued to see heavy volume with the notes improved on an outright and dollar-neutral basis.

Topical news lifted Insulet Corp.’s 0.375% convertible notes due 2026 although the notes were largely trading in line with stock.

Marriott’s new heights

Marriott’s 3.25% convertible notes due 2027 topped the volume charts on Tuesday with the notes returning to their highest outright level since pricing.

The 3.25% notes jumped 2 points outright as stock spiked early in the session, a source said.

The notes were changing hands at 102.75 versus a stock price of $144.34 about one hour into the session.

However, the notes came in with stock to trade at 101.5 shortly before 11 a.m. ET.

They were seen at 101.875 versus a stock price of $142.84 in the late afternoon.

The notes expanded about 0.25 point on the move up.

There was $16.5 million in reported volume.

The recent exercise of the deal’s $75 million greenshoe, which lifted the total issue size to $575 million, seemed to be responsible for the sudden burst of activity in the name.

“It seems like the underwriter is pushing them out the door,” a source said.

Marriott’s stock traded to a low of $141.84 and a high of $146.09 before closing the day at $143.66, an increase of 1.86%.

Marriott’s convertible notes offering launched the previous week’s deluge of primary market activity with the global vacations company pricing the 3.25% convertible notes at par on Dec. 5.

While the notes briefly traded up to a 103-handle on their market debut, they have largely traded on a par-handle since.

DISH uptrend

The heavy volume and strong uptrend in DISH’s 3.375% convertible notes continued on Tuesday with the notes adding outright and on swap.

The 3.375% notes were up about 1.5 points outright on Tuesday.

They were changing hands at 64.875 versus a stock price of $16.13 in the late afternoon, according to a market source.

The yield was 16.5%.

The convertibles expanded about 0.5 point on hedge, a source said.

Reported trading volume reached $14 million.

The notes have seen heavy volume in recent sessions.

The 3.375% notes are largely a yield play, although the notes are traded on swap, a source said.

DISH’s stock traded to a low of $15.81 and a high of $16.45 before closing the day at $16.15, an increase of 4.87%.

Insulet lifted

Insulet’s 0.375% convertible notes due 2026 were on the rise in heavy volume on Tuesday with a competitor’s acquisition lifting the company’s stock.

The 0.375% notes rose about 4 points outright with stock up 4%.

They were seen at 147 versus a stock price of $311.66 early in the session.

By late afternoon, the notes were even higher, changing hands at 148.375 versus a stock price of $313.63.

There was $12 million in reported volume.

The insulin pump manufacturer’s stock traded to a low of $307.67 and a high of $314.70 before closing the day at $313, an increase of 4.04%.

News that industry peer Tandem Diabetes Care Inc. was acquiring an insulin patch pump manufacturer sent Tandem’s stock lower and Insulet’s higher.

Mentioned in this article:

DISH Network Corp. Nasdaq: DISH

Insulet Corp. Nasdaq: PODD

Marriott Vacations Worldwide Corp. NYSE: VAC

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