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Morning Commentary: Airlines in focus; Southwest, Spirit Airlines convertibles improve
By Abigail W. Adams
Portland, Me., April 15 – It was a quiet start to the day in the convertibles secondary space on Monday as equity markets attempted to rebound from the heavy selling of the previous session.
Equity indexes were mixed as Treasury yields continued to climb on reduced rate cut expectations with the rate-sensitive small cap index the underperformer.
The Dow Jones industrial average was up 100 points, or 0.26%, the S&P 500 index was up 0.23%, the Nasdaq Composite index was up 0.04% and the Russell 2000 index was down 0.18% shortly before 11 a.m. ET.
There was $56 million in reported convertible bond trading volume about one hour into the session with few names seeing concentrated activity.
While volume was light across the board, airlines were active with Southwest Airlines Co.’s 1.25% convertible notes due May 1, 2025 (Baa1/BBB) and Spirit Airlines, Inc.’s 1% convertible notes due 2026 the top two traded names.
Southwest’s 1.25% convertible notes were up alongside stock early in the session.
The notes gained about 0.5 point outright with stock up more than 1%.
The notes were trading at par versus a stock price of $28.02, according to a market source.
There was $7 million in reported volume.
Southwest’s stock was trading at $27.89, an increase of 1.31%, shortly before 11 a.m. ET.
Spirit Airlines’ 1% convertible notes due 2026 made large gains after the beleaguered airline provided an update on its financial outlook for the current quarter and year.
The 1% notes gained almost 2 points outright to trade at 51.875 early in the session, according to a market source.
The yield was about 35.75%.
There was $3 million in reported volume.
Spirit’s stock was trading at $4.37, an increase of 4.55%, shortly before 11 a.m. ET.
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