Convertibles trading slow; Western Digital, Fortive notes active; Repligen improves

By Abigail W. Adams

Portland, Me., July 22 – It was a summer Monday in the convertibles secondary space with not much activity on the tape throughout the session.

However, with some new deals whispered to be on the horizon and a heavy week of earnings reports from convertibles issuers ahead, the pace is expected to pick up as the week progresses.

There was $31 million in reported volume about one hour into Monday’s session and $175 million on the tape heading into the afternoon, sources said.

Western Digital Corp.’s 1.5% convertible notes due 2024 were among the most actively traded issues on Monday with the tech sector, in general, on the rise as China signaled progress in trade talks.

Fortive Corp.’s 0.875% convertible notes due 2022 were also active with investment-grade convertible notes continuing to attract buyers.

While volume was light, Repligen Corp.’s recently priced 0.375% convertible notes due 2024 also continued to improve on Monday.

Western Digital active

Western Digital’s 1.5% convertible notes due 2024 were among the most active issues on a low volume Monday with the notes the only ones to break $10 million in reported volume by the late afternoon.

The 1.5% notes were changing hands around 92.5 with the yield on the notes 3.3% early in the session, according to a market source.

They rose to 92.75 with the yield dropping to 3.23% by the late afternoon.

The notes saw $11 million in reported volume by the late afternoon. However, there were only three trades on the tape with two large trades of $5 million, a source said.

Western Digital stock was making gains early Monday.

While the stock move was spurring activity in the notes, the conversion premium for the notes remains enormous with the notes largely trading for yield.

Western Digital stock closed Monday at $55.31, an increase of 5.43%.

The tech sector in general was on the rise on Monday as China signaled trade talks would resume and Chinese companies began the process of buying agricultural products from the United States, a term of the agreement allegedly made during the G-20 summit.

Fortive on the tape

Fortive’s 0.875% convertible notes due 2022 were also active with a large amount changing hands over two trades.

The 0.875% notes traded at 103, a market source said.

There were about $7 million of the bonds on the tape during Monday’s session.

Fortive stock was traded as high as $79.19 before closing the day at $78.99, an increase of 0.61%.

Fortive will report earnings after the market close on Thursday.

Repligen improves

Repligen’s recently priced 0.375% convertible notes due 2024 continued their upward momentum on Monday.

While volume was light, the 0.375% notes traded just shy of 105 in the early afternoon and closed the day around 104.5, sources said.

After a large dollar-neutral expansion out of the gate, the notes were continuing to improve on Monday, according to a market source.

Repligen stock traded as high as $89.71 on Monday before closing the day at $88.29, an increase of 1.72%.

Despite pricing on the rich end of talk, Repligen’s 0.375% convertible notes skyrocketed out of the gate, trading up to 103 on an outright basis and expanding 2.5 points dollar-neutral on their market debut July 17.

Mentioned in this article:

Fortive Corp. NYSE: FTV

Repligen Corp. Nasdaq: RGEN

Western Digital Corp. Nasdaq: WDC

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