Morning Commentary: Booking convertibles active on liquidity trade; Sea recoups losses

By Abigail W. Adams

Portland, Me., March 14 – The convertibles secondary space was off to a quiet start on Tuesday as equity and credit markets rebounded from the shockwaves of SVB Financial Group’s near overnight implosion.

Confidence in the banking sector seemed to return after extraordinary measures taken by banking regulators to backstop all deposits at Silicon Valley Bank and Signature Bank and prevent runs on regional banks.

“They calmed down the contagion,” a source said.

February’s Consumer Price Index report, which was released pre-open and came largely in line with expectations, further helped lift market sentiment with expectations for the Federal Reserve’s rate hike schedule dramatically altered.

The ‘Fed Put’ was in full effect, sources said.

Equities roared at the open with the Dow Jones industrial average up 452 points, or 1.43%, the S&P 500 index up 1.98%, the Nasdaq Composite index up 2.23% and the Russell 2000 index up 3.03% shortly before 11 a.m. ET.

There was $91 million on the tape about one hour into the session with a wide range of names in play although few saw concentrated activity.

Booking Holdings Inc.’s 0.75% convertible notes due 2025 (A3/A-) saw heavy volume early in the session with liquidity trades still dominating the tape, a source said.

The 0.75% notes were changing hands just shy of 142.25 versus a stock price of $2,505.15 early in the session.

There was $10 million in reported volume with two $5 million plus trades on the tape.

Booking’s stock was trading at $2,508.96, an increase of 2.87%, shortly before 11 a.m. ET.

Sea Ltd.’s 0.25% convertible notes due 2026 were also active with the notes recouping their losses from the previous session.

The notes opened the day on a 76-handle but climbed to trade at 77.5 versus a stock price of $78.16 early in the session.

The yield on the notes was just shy of 7.75%.

Sea’s American Depositary Shares were seen at $77.47, an increase of 3.58%, shortly before 11 a.m. ET.

The notes fell 1.5 points to trade down to 76 early on Monday.

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