Morning Commentary: Five9 equity tanks on leadership change, convertibles fall outright

By Abigail W. Adams

Portland, Me., Oct. 10 – It was a quiet morning on what is widely expected to be a quiet day in the convertibles secondary space with bond markets closed and equities under pressure early in the session.

After wavering at the open, selling pressure pushed equity indexes into the red with the Dow Jones industrial average down 70 points, or 0.24%, the S&P 500 index down 0.66%, the Nasdaq Composite index down 1.16% and the Russell 2000 index was down 0.64% shortly before 11 a.m. ET.

Secondary activity was anemic with $30 million in reported volume about one hour into the session.

There was no activity in last week’s sole deal – Semtech Corp.’s 1.625% convertible notes due 2027.

The notes underperformed on an outright basis and closed last Friday at 97.75.

However, they performed well on swap with the notes up about 1 point dollar-neutral, a source said.

While there was little activity in recent issues, topical news pushed Five9 Inc.’s 0.5% convertible notes due 2025 into the spotlight.

The 0.5% notes sank 7 points outright as stock fell more than 20% following the departure of the company’s CEO.

The notes were changing hands at 87.25 versus a stock price of $64.24 in early trade.

There was $4 million in reported volume.

Five9’s stock was trading at $61.30, a decrease of 20.37%, shortly before 11 a.m. ET.

News broke on Monday that Five9 CEO Rowan Trollope will leave the company and resign from the board.

The news sent the company’s stock into a tailspin although it simultaneously announced it was raising its third-quarter guidance.

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