Morning Commentary: Sarepta convertible notes active early, weaken dollar-neutral

By Abigail W. Adams

Portland, Me., Sept. 27 – It was another slow start to the day in the convertibles secondary space as markets stabilized after the latest Federal Reserve induced sell-off pushed credit and equity markets to new and recent lows and sent Treasury yields to fresh heights.

Equity indexes were in the green to start Tuesday’s session. However, sources were skeptical about the staying power of the rally.

The Dow Jones industrial average was up 269 points, or 0.92%, the S&P 500 index was up 1.15%, the Nasdaq Composite index was up 1.58% and the Russell 2000 index was up 1.94% shortly before 11 a.m. ET.

There was $52 million on the tape about one hour into the session with no name seeing more than $5 million in reported volume.

Sarepta Therapeutics Inc.’s 1.25% convertible notes due 2027 were active early in the session with the notes unchanged outright as stock recovered.

The 1.25% convertible notes were changing hands at 102.6 versus a stock price of $108.48 early in the session, according to a market source.

The notes were coming in on a dollar-neutral basis.

There was $4 million in reported volume.

Sarepta’s stock was trading at $109.36, an increase of 2.98%, shortly before 11 a.m. ET.

While lower on an outright and dollar-neutral basis, the $1 billion issue, which priced at par on Sept. 13, has held up well amid the most recent market downturn, a source said.

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