Trading light; old Yahoo! convertibles active as maturity nears; Spirit Realty flat

By Abigail W. Adams

Portland, Me., Nov. 21 – Trading volume was light in the convertibles secondary space with not much activity during the pre-Thanksgiving session, sources said.

While equities saw a slight rebound in intraday trading on Wednesday, sources were pessimistic about the upswing’s staying power.

The pessimism was warranted.

The Dow Jones industrial average was up 132 points early in the session.

While the index was posting gains for the majority of Wednesday’s session, it sank in the late afternoon and closed the day down 1 point.

However, trading volume was light on Wednesday and was not indicative of the future direction of the market, a source said.

Altaba Inc.’s 0% convertible notes due Dec. 1, 2018 were among the most actively traded issues in the secondary space with the maturity of the notes quickly approaching.

Illumina Inc.’s 0% convertible notes due 2023 also saw some activity as stock rebounded from its lows. However, the notes were largely unchanged dollar-neutral, a market source said.

Spirit Realty Capital Inc.’s 2.875% convertible notes due May 15, 2019 again made an appearance on the volume charts, although the notes were largely trading sideways.

Altaba matures

Altaba’s 0% convertible notes due Dec. 1, 2018 were among the most actively traded issues of the day with more than $6 million of the notes on the tape by the late afternoon.

The notes were seen changing hands at 114.75, which was essentially parity, a market source said.

Altaba stock closed Wednesday at $62.15, an increase of 2.07%.

The trading activity was the result of holders converting the notes out, a market source said.

The $1.5 billion issue comes due in one week.

However, the outstanding amount of the notes has slowly diminished with only about $1 billion currently outstanding, a market source said.

Holders may have been converting the notes or the company may have been buying back the bonds in the run up to their maturity, a source said.

The notes were initially issued by Yahoo! Inc. in 2013, which became Altaba after the sale of its internet business to Verizon in 2017.

Illumina unchanged

Illumina’s 0% convertible notes due 2023 were also active early in the session as stock rebounded from its lows.

The notes were up outright to trade at 125.125, a market source said. However, they were largely unchanged dollar-neutral.

Illumina stock closed Wednesday at $309.88, an increase of 2.92%.

While the notes saw gains on an outright basis on Wednesday, they have steadily traded down since the beginning of the month when they were in the 137.5 area, a market source said.

They peaked on Oct. 1 when they traded to a high of 145, the source said.

The 0% notes have been one of the outperformers of 2018, which has seen several deals fall apart in secondary trading.

The 0% notes priced at par in mid-August.

While several sources said the pricing of the notes was rich, outright demand for investment-grade paper drove their valuation.

Illumina stock was $326.98 when the notes priced.

Spirit Realty active

Spirit Realty’s 2.875% convertible notes due May 15, 2019 were the most active issue in the secondary space on a slow Wednesday, a market source said.

While more than $10 million of the bonds were on the tape by the late afternoon, there were only two $5 million plus trades, a market source said.

The notes saw little price movement and changed hands at 99.625 with a yield of 3.684%.

Spirit Realty stock closed Wednesday at $7.56, a decrease of 0.92%.

The notes have been active in recent weeks as their maturity date approaches. There is $402.5 million outstanding.

Mentioned in this article:

Altaba Inc. Nasdaq: AABA

Illumina Inc. Nasdaq: ILMN

Spirit Realty Capital Inc. NYSE: SRC

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.