Morning Commentary: Workday convertibles down outright, up on hedge post-earnings

By Abigail W. Adams

Portland, Me., May 27 – It was a quiet morning in the convertibles secondary space on another strong day for equity markets.

The Dow Jones industrial average was up 217 points, or 0.68%, the S&P 500 index was up 1.37%, the Nasdaq Composite index was up 1.97% and the Russell 2000 index was up 1.37% shortly before 11 a.m. ET.

There was about $90 million in reported convertibles trading volume a little more than one hour into the session.

With bond markets in the United States closing early ahead of the Memorial Day weekend, the session was expected to be a quiet one, a source said.

Workday Inc.’s 0.25% convertible notes due Oct. 22, 2022 were in focus with the notes down outright but up on hedge as stock tanked following earnings.

The 0.25% convertible notes were down about 7 points outright with stock off more than 9%.

The notes were changing hands at 110.875 early in the session.

They gained about 1.5 points on swap, a source said.

Workday’s stock was changing hands at $152.16, a decrease of 9.51%, shortly before 11 a.m. ET.

Stock fell after the software company reported mixed earnings.

Workday reported earnings per share of 83 cents versus analyst expectations for earnings of 85 cents.

Revenue of $1.43 billion was in line with expectations.

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