Morning Commentary: Convertibles quiet as volatility hits equity markets; new paper slow to trade

By Abigail W. Adams

Portland, Me., March 19 – The secondary market in the convertibles world was off to its typically slow start on Monday as volatility once again strikes equity markets.

New paper from Zendesk Inc. and Live Nation Entertainment, Inc., which debuted on Friday, was slow to trade early Monday.

There was only one print seen on the tape for Zendesk’s new 0.25% convertible notes due 2023. Zendesk’s 0.25% notes were seen trading at 100.875, according to a market source. Zendesk stock was at $46.67, a decrease of 0.53% early in the session.

Live Nation’s new 2.5% convertible notes due 2023 were among the top traded early in the session with a “whopping” $3 million on the tape, a market source said.

“That kind of tells you where we’re at,” the source said. “Ultimately, they’ll do well but there’s not much going on there this morning.”

Live Nation’s new 2.5% notes continued to trade just under 102 with the stock down 1.59%.

While the convertibles space was quiet early Monday, equities were off to a tumultuous start with the Dow Jones industrial average down 205 points early in the session.

“That seems to be what happens when the market is down,” a market source said. “When volatility picks up like this, converts tend to hold back and let the insanity reign in equities.”

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