Nabors climb continues; LCI Industries, Silicon Labs, Envista convertible notes active

By Abigail W. Adams

Portland, Me., Feb. 14 – The convertibles primary market remained dormant on Tuesday.

While sources continued to express surprise about the slow pipeline, some activity is expected before the week draws to a close.

Meanwhile, it was another slow day in the convertibles secondary space with equities volatile following the release of the latest U.S. Consumer Price Index report.

The report came in hotter-than-anticipated with an all-items increase of 6.4% versus the 6.2% expected and a core CPI reading of 5.6% versus the 5.5% expected.

Equity indexes opened in the red, popped into positive territory in the first hour of trading, slipped back to losses as the session progressed but closed the day mixed.

While equity indexes wavered between gains and losses as investors digested the data, the price movement was muted with moves of less than 1% in either direction.

The Dow Jones industrial average closed Tuesday down 157 points, or 0.46%, the S&P 500 index closed down 0.03%, the Nasdaq Composite index closed up 0.57% and the Russell 2000 index closed down 0.06%.

Trading volumes were light with $60 million in reported volume about one hour into the session and $400 million on the tape about one hour before the market close.

Nabors Industries, Inc.’s recently priced 1.75% convertible notes due 2029 continued their upward momentum with the notes adding on an outright and dollar-neutral basis.

Silicon Laboratories Inc.’s 0.625% convertible notes due 2025 were the top traded issue in the space with the deep-in-the-money notes moving higher alongside stock.

While activity in the issue dwindled as the session progressed, Envista Holdings Corp.’s 2.375% convertible notes due 2025, an off-the-run issue that rarely makes an appearance on the tape, was among the top traded names early in the session with the deep-in-the-money notes moving alongside stock.

Earnings-related news remained a driver of activity in the space with LCI Industries’ 1.125% convertible notes due 2026 volatile alongside stock after reporting.

Nabors outperforms

Nabors’ recently priced 1.75% convertible notes due 2029 continued their upward momentum in active trading on Tuesday.

The notes climbed almost 2 points outright with stock up early in the session.

They were seen at 110 versus a stock price of $174 shortly before 11 a.m. ET.

While the notes came in alongside stock as the session progressed, they continued to add on a dollar-neutral basis, a source said.

The notes were changing hands at 108.5 versus a stock price of $167.99 in the late afternoon.

There was $12 million in reported volume.

Nabors’ stock traded to a low of $165.30 and a high of $178.34 before closing at $167.45, a decrease of 3.7%.

The 1.75% notes, which priced at par in an overnight deal last Thursday, have skyrocketed since hitting the secondary space with the notes expanded about 7.5 points dollar-neutral since pricing, a source said.

Active issues

Several off-the-run, deep-in-the-money convertible notes were active on Tuesday due to no news in particular, sources said.

Silicon Laboratories’ 0.625% convertible notes due 2025 were the top traded issue in the secondary space.

The notes were trading at 163.375 versus a stock price of $192.18 in the late afternoon.

There was $13 million in reported volume.

The company’s stock traded to a low of $185.09 and a high of $194.68 before closing at $192.98, up 2.24%

Envista Holdings’ 2.375% convertible notes due 2025, an off-the-run issue that rarely makes an appearance on the tape, was among the top traded issues early in the session although activity in the name later waned.

The notes were seen at 196.75 versus a stock price of $39.92 early in the session.

They were changing hands at 197.125 versus a stock price of $40.20 in the late afternoon.

The deep-in-the-money notes were moving alongside stock, a source said.

There was $6 million in reported volume.

Envista’s stock traded to a low of $39.68 and a high of $40.85 before finishing at $40.29, a 0.57% gain.

LCI’s earnings

LCI Industries’ 1.125% convertible notes due 2026 were volatile alongside stock on the heels of its earnings report.

The 1.125% notes were down 2 points outright with stock off as much as 7% early in the session.

The notes traded down to a 90-handle.

However, the notes pared their outright losses and stood poised to close the day with a 0.5 point outright gain as stock returned to the green by the session’s close.

The notes were trading at 92.875 versus a stock price of $116.02 in the late afternoon.

There was $9 million in reported volume.

LCI’s stock traded to a low of $107.28 and a high of $116.89 before closing at $116, an increase of 0.35%.

The manufacturer of component pieces for recreational and transportation equipment missed expectations with losses per share of 68 cents versus analyst expectations for losses per share of 44 cents.

Revenue was $894.35 million versus analyst expectations for revenue of $912.46 million.

Mentioned in this article:

Envista Holdings Corp. NYSE: NVST

LCI Industries NYSE: LCII

Nabors Industries, Inc. NYSE: NBR

Silicon Laboratories Inc. Nasdaq: SLAB

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