Morning Commentary: Sea convertible notes in focus early, improve post-earnings

By Abigail W. Adams

Portland, Me., May 17 – It was an active start to the day in the convertibles secondary space as equity markets rallied after a choppy session on Monday.

The Dow Jones industrial average was up 156 points, or 0.50%, the S&P 500 index was up 0.87%, the Nasdaq Composite index was up 0.96% and the Russell 2000 index was up 1.42% shortly before 11 a.m. ET.

There was $121 million on the tape about one hour into the session with one name dominating trading activity.

Sea Ltd.’s 0.25% convertible notes due 2026 were making gains after the Singapore-based consumer internet company posted a surprise earnings beat.

The long-busted 0.25% notes were changing hands just shy of 74 versus a stock price of $76.31 early in the session.

The yield on the notes was just shy of 7.5%.

There was $9 million in reported volume.

Sea’s American Depositary Shares were trading at $77.18, an increase of 9.74%, shortly before 11 a.m. ET.

Sea’s equity surged after the company reported losses per share of 80 cents versus analyst expectations for loses of $1.17.

Revenue was $2.90 billion versus analyst expectations for revenue of $2.89 billion.

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