DISH short-duration convertibles in focus, edge higher; Ziff Davis improves; Sabre up

By Abigail W. Adams

Portland, Me., Nov. 17 – The convertibles primary market closed the week with no deals, a surprise to many given the strong market conditions.

The prospects for new deal activity in the coming week are low with U.S. equity and bond markets closed for the Thanksgiving holiday on Thursday.

However, the primary market is far from closed with the first two weeks of December expected to be busy.

Meanwhile, activity in the secondary space tempered on Friday as markets continued to level off from the post-CPI surge on Tuesday.

While equity indexes were mixed for most of Friday’s session, they closed the day in the green and closed the week with strong gains.

The Dow Jones industrial average closed Friday up 2 points, or 0.01%, the S&P 500 index closed up 0.13%, the Nasdaq Composite index closed up 0.08% and the Russell 2000 index closed up 1.35%.

There was $77 million in reported convertible bond trading volume about one hour into the session and $335 million in the late afternoon.

While high-grade names remained the driver of trading volume, buyers continued to lift some badly beaten issues.

DISH Network Corp.’s soon-to-mature 2.375% convertible notes due March 15, 2024 (Caa2/CCC-) were among the top traded issues of Friday’s session with the notes edging higher after a dramatic recovery over the past week.

Sabre Corp.’s 4% exchangeable notes due 2025, an off-the-run issue that rarely trades in volume, made large gains in active trade during Friday’s session.

Ziff Davis Inc.’s (formerly j2 Global Inc.) 1.75% convertible notes due 2026 also improved in active trade.

DISH rebounds

DISH’s soon-to-mature 2.375% convertible notes due March 15, 2024 were in focus on Friday with the notes edging higher after a dramatic rebound over the past week.

The 2.375% notes were trading in the 95.125 to 95.375 context throughout the session, a source said.

The yield narrowed to about 18%.

There was $14 million in reported volume.

The notes are not equity sensitive and have long traded based on market expectations about their redemption upon maturity.

The notes saw heavy selling pressure the previous week after DISH’s large earnings miss raised doubts.

The notes sank to a 92-handle with the yield jumping above 25%, which some sources felt was a high trading level given the company’s fundamentals.

However, the notes have seen a large rebound over the past week as risk-on sentiment returned and buyers flooded the market.

The notes were lifted to a 95-handle the previous session as the market expressed increased confidence about the company’s ability to cover the quickly maturing debt.

Sabre higher

Sabre’s 4% exchangeable notes due 2025 made large gains in active trade on Friday.

The notes added about 4 points outright to trade up to a 94-handle.

They were changing hands at 94.25 in the mid-afternoon with the yield about 8.375%, according to a market source.

While an illiquid issue, the notes were active with $7 million on the tape.

Friday marked a strong session for the company’s stock, which traded to a low of $3.69 and a high of $3.91 before closing at $3.88, an increase of 4.58%.

The 4% notes have tumbled since September when they traded above par.

They have been trading on a 92-handle for much of October and November.

Ziff Davis active

Ziff Davis’ 1.75% convertible notes due 2026, another off-the-run issue, improved in active trade on Friday.

The 1.75% convertible notes added about 1.5 points outright with stock up more than 2%.

They were trading at 93.75 versus a stock price of $65.72 in the late afternoon, a source said.

There was $9 million in reported volume.

Ziff Davis’ stock traded to a low of $64.66 and a high of $66.02 before closing at $65.96, up 2.18%.

The 1.75% notes have largely traded on a 90-handle since the company reported earnings on Nov. 7.

However, the notes were lifted over the past week alongside the broader market.

Mentioned in this article:

DISH Network Corp. Nasdaq: DISH

Sabre Corp. Nasdaq: SABR

Ziff Davis Inc. Nasdaq: ZD

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