Morning Commentary: Sea convertibles active post earnings; DISH notes lifted early

By Abigail W. Adams

Portland, Me., May 16 – It was a quiet morning in the convertibles primary and secondary markets with no new deals launching and trading activity thin.

Equity indexes saw a soft open but turned mixed as the session progressed with all eyes on debt ceiling negotiations.

The Dow Jones industrial average was down 203 points, or 0.61%, the S&P 500 index was down 0.33%, the Nasdaq Composite index was up 0.02% and the Russell 2000 index was down 1.15% shortly before 11 a.m. ET.

There was $92 million in reported volume about one hour into the session with investment-grade issues continuing to dominate the tape.

However, earnings-related news continued to spark activity in some outstanding issues.

Sea Ltd.’s 0.25% convertible notes due 2026 were active with its equity down double digits.

However, the 0.25% convertible notes’ dollar-price was unchanged.

The notes continued to trade on an 80-handle and were seen at 80.625 for a yield of 6.842% early in the session, according to a market source.

There was $7 million in reported volume.

Sea’s American Depositary Shares were trading at $78.48, a decrease of 10.93%, shortly before 11 a.m. ET.

Sea’s equity sank after the Singapore-based tech conglomerate reported a large earnings miss.

While revenue of $3.04 billion was in line with expectations, the company reported earnings per share of 45 cents versus analyst expectations for earnings of 73 cents.

DISH Network Corp.’s soon-to-mature 2.375% convertible notes due March 15, 2024 were lifted on news of insider stock buying.

The 2.375% notes added about 1.25 points outright.

The notes were changing hands at 85.25 with a yield of 23% early in the session, according to a market source.

There was $6 million in reported volume.

DISH’s stock traded up as much as 5% out of the gate but came in to change hands at $6.64, an increase of 1.14%, shortly before 11 a.m. ET.

Stock made strong initial gains on Tuesday following reports that director James DeFranco had purchased 3 million shares of the company.

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