Morning Commentary: Leisure, airline convertibles under pressure; Five9 notes improve

By Rebecca Melvin

Concord, N.H., July 19 – Five9 Inc.’s 0.5% convertible notes due 2025 gained in active trade early Monday despite a broad-based retreat in financial markets amid worries about the effect of the pandemic’s Delta variant on the economy.

The Dow Jones industrial average tumbled 802 points, or 2.3%, in the early going, extending losses from Friday when the index snapped a three-week winning streak. The S&P 500 index and Nasdaq were down 1.9% and 1.7%, respectively, and Stoxx Europe 600 dropped 2.3%, led lower by shares of travel, leisure and commodities companies.

But the Five9 convertibles moved up more than 6 points to 152.377, according to Trace data, against the underlying stock, which was up 4.3% to $185.17 in the early going.

The San Ramon, Calif.-based provider of cloud contact center software priced $747.5 million of the convertibles on May 21, 2020. They were issued together with stock to repurchase the company’s older 0.125% convertibles due 2023.

Five9’s 0.5% notes were busy for early Monday and well ahead of other issues in terms of trading volume. There were $25,934,000 of the bonds that changed hands by 10:30 a.m. ET. In total, $147,202,000 bonds had traded, according to Trace data.

The convertibles of Booking Holdings Inc. and Expedia Group Inc. were also seen in trade.

The Booking 0.75% convertibles due 2025 traded at 140 with shares down to 2.5% at $2,060.71.

Expedia’s 0% convertible notes due 2026 traded at 107 in the early going against shares that were at $151.29, down about 4% in intraday activity. That pricing compared to the Expedia convertibles trading at 107.875 versus the stock at $158.79 late Thursday.

Airline securities were also in the crosshairs on Monday. Southwest Airlines Co.’s 1.25% convertibles due 2025 (Baa1/BBB) were down 7.5 points outright at 138.75.

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