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Morning Commentary: Expedia convertible notes remain active; Smart Global exchange eyed
By Abigail W. Adams
Portland, Me., Jan. 19 – It was a slow start to the day in the convertibles secondary space on Thursday as selling resumed in equities with the looming debt ceiling and recession concerns weighing on investor sentiment.
The Dow Jones industrial average was down 28 points, or 0.73%, the S&P 500 index was down 0.72%, the Nasdaq Composite index downs 0.88% and the Russell 2000 index was down 1.25% shortly before 11 a.m. ET.
There was $65 million in reported convertibles trading volume about one hour into the session with few names seeing concentrated trading activity.
Expedia Inc.’s 0% convertibles due 2026 (Baa3/BBB-/BBB-) continued to see heavy volume with large trades on the tape.
The 0% notes were little changed in the heavy volume.
The notes were changing hands at 89.282 versus an equity price of $103.62 early in the session, according to a market source.
There was $6.5 million in reported volume over two trades, a source said.
Expedia’s stock was seen at $104.20, an increase of 0.28%, shortly before 11 a.m. ET.
While the primary market was quiet throughout the week, convertible issuers were meeting their refinancing needs through exchanges.
Smart Global Holdings, Inc. announced a dollar-for-dollar exchange with holders of its 2.25% convertible notes due 2026 for new 2% convertible notes due 2029.
The company issued the new 2% convertible notes and paid $15.6 million in cash in exchange for $150 million in principal of its 2.25% notes.
The exchange sparked activity in the 2.25% notes, which were trading at 106.784 early in the session.
Smart Global’s stock was $15.99, a decrease of 3.96%, shortly before 11 a.m. ET.
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