Morning Commentary: Sea convertible notes in focus early, gain with stock

By Abigail W. Adams

Portland, Me., Oct. 19 – It was another quiet start to trading in the convertibles secondary space with the usual players on the tape.

Equity markets launched the day in positive territory as the market continued to weigh the threat of inflation versus positive earnings reports.

While the 10-year Treasury yield opened the day above 1.6%, growth and tech stocks continued to post gains.

Some have speculated that even with an elevated Treasury yield, the yield was negative compared to inflation, causing many to take their chances in higher risk areas in hopes for a return.

The Dow Jones industrial average was up 161 points, or 0.46%, the S&P 500 index was up 0.59%, the Nasdaq Composite was up 0.57% while the Russell 2000 index was down 0.01% shortly before 11 a.m. ET.

There was $100 million in reported volume a little more than one hour into the session.

Sea Ltd.’s 0.25% convertible notes due 2026 were in focus with the notes hitting their highest outright level since pricing.

The 0.25% convertibles were changing hands at 118.125 versus an equity price of $367.61 early in the session.

There was about $9 million in reported volume.

Sea’s American Depositary Shares were changing hands at $371.97, an increase of 4.17%, shortly before 11 a.m. ET.

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