Morning Commentary: Sea convertible notes active in market on otherwise quiet morning

By Abigail W. Adams

Portland, Me., Oct. 12 – It was a quiet start to the day in the convertibles secondary space as equities struggled to find direction.

Equity benchmarks were largely flat as the 10-year Treasury yield hovered around 1.6% and WTI crude oil futures held above $80.

The Dow Jones industrial average was up 21 points, or 0.06%, the S&P 500 index was down 0.02%, the Nasdaq Composite was down 0.06% and the Russell 2000 index was up 0.41% shortly before 11 a.m. ET.

There was $75 million in reported volume a little over one hour into the session with few names seeing concentrated trading activity, a source said.

With the latest consumer price index data set to be released on Wednesday in addition to the launch of third-quarter earnings, many were waiting to see the future direction of the market before making a move.

Sea Ltd.’s 0.25% convertible notes due 2026 remained the most active name in the space although with little movement in price.

The 0.25% convertible notes were changing hands just shy of 102 versus an equity price of $319.45 early in the session.

There was about $7.5 million in reported volume.

Sea’s American Depositary Shares were changing hands at $321.53, an increase of 1.56%, shortly before 11 a.m. ET.

The $2 billion issue has been a mainstay on the volume charts since pricing on Sept. 10. However, the notes have largely moved with its equity, sources said.

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