Morning Commentary: Spirit Realty convertibles tumble on earnings miss; Lumentum trades higher

By Stephanie N. Rotondo

Seattle, May 4 – Convertible bond investors continued to focus on earnings news on Thursday, driving Spirit Realty Capital Inc.’s paper downward and Lumentum Holdings Inc.’s bonds upward.

For its part, Spirit Realty reported first-quarter results that were below expectations. As a result, the company’s convertibles were trading off anywhere from 2 to 4.5 points.

A market source deemed the 2.875% convertible notes due 2019 off a deuce at mid-morning, trading around 98. The 3.75% convertible notes due 2021 were meantime down about 4.5 points, trading around 97.25.

The company’s underlying equity (NYSE: SRC) wasn’t doing very well either, falling $2.03, or 22.87%, to $6.87.

As for Lumentum, its results were mixed, coming in line on profit but below expectations on revenue.

The company also issued current quarter guidance that disappointed.

However, investors seemed optimistic that the company’s efforts in the 3D sensor market could be fortuitous and, as a result, the 0.25% convertible notes due 2024 were gaining ground.

A source saw the issue rising about 8 points in early dealings, trading around 107.625.

As for the company’s shares (Nasdaq: LITE), they were also faring better, rising $7.50, or 17.54%, to $50.25.

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