Morning Commentary: Convertibles trade quietly; Becton Dickinson, Ares Capital active

By Rebecca Melvin

New York, Nov. 18 – U.S. convertibles were trading mildly in light volume early Monday as market players sized up the broader markets, watching U.S. Treasuries and other sectors like utilities mount a bit of a reversal, a New York-based trader said.

Renewed uncertainties about the prospects of a U.S.-China trade deal and news of a meeting between the White House and Federal Reserve chairman Jerome Powell may have sparked a bid in U.S. Treasuries, the trader said.

Powell met with president Donald Trump and Treasury secretary Steven Mnuchin on Monday to discuss the economy, according to a statement from the Federal Reserve. The possibility of negative interest rates was discussed, and that was unexpected, the trader said.

Becton Dickinson and Co. was trading most actively in the mandatory space, and that paper was looking in line with its recent swap market, with shares at $59.75. Becton Dickinson stock was down $2.81, or 1.1%, at $245.45.

In the bond space, Ares Capital Corp.’s 4.625% convertibles due 2024 was the most actively traded name in the bond space, with the issue seen printing at 106.5 and 106.6 early Monday, which was flat to lower on an outright basis compared to recent trades.

Sea Ltd.’s 1% convertibles also continued to see some trade and they were up at 103 last with the underlying common up 2% at $37.12. Sea’s $1 billion of notes priced last week.

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