Affirm convertibles gain on earnings; DexCom notes hit new low; Fluor up outright

By Abigail W. Adams

Portland, Me., Aug. 25 – A sleepy start to the day in the convertibles secondary market gave way to decent volume for a Friday in the heart of the summer doldrums with earnings-related news, investment-grade trades, and stock volatility driving activity.

Trading volume was at a crawl early in the session as markets digested Federal Reserve chair Jerome Powell’s highly anticipated comments from Jackson Hole.

Equity indexes were volatile surrounding Powell’s speech, which did little to shed light on the ambiguity surrounding the Fed’s next rate moves, a source said.

While an optimistic start to the session gave way to selling that dragged indexes into negative territory, buyers emerged mid-session to lift indexes firmly into positive territory by the close.

The Dow Jones industrial average closed Friday up 247 points, or 0.73%, the S&P 500 index closed up 0.67%, the Nasdaq Composite index closed up 0.94% and the Russell 2000 index closed up 0.39%.

There was $37 million in reported volume about one hour into the session and $350 million on the tape about one hour before the market close.

Affirm Holdings Inc.’s 0% convertible notes due 2026 were in the spotlight with the notes making gains following better-than-expected earnings.

DexCom Inc.’s 0.375% convertible notes due 2028 also saw heavy volume as the notes hit their lowest outright level since pricing in May.

Fluor Corp.’s recently priced 1.125% convertible notes due 2029 gained outright on a strong day for the company’s stock, although the notes remain among the ranks of recent issues to underperform in the aftermarket.

Affirm’s earnings

Affirm’s 0% convertible notes due 2026 were in the spotlight on Friday with the notes making gains on the heels of a better-than-expected earnings report.

The high-premium notes gained about 3 points outright.

They were changing hands at 75.25 versus a stock price of $17.88 in the late afternoon, according to a market source.

The yield was about 9%.

There was $14 million in reported volume.

Affirm’s stock traded to a low of $15 and a high of $18.32 before closing at $17.79, an increase of 28.82%.

Stock soared on Friday after the buy-now, pay-later firm posted earnings.

Affirm reported losses per share of 68 cents, which were in line with expectations.

However, the company posted a large revenue beat of $446 million versus the $406 million expected with guidance coming in above expectations.

While Affirm’s stock soared on Friday, the conversion premium on the notes remains above 1,000% with the convertible notes largely trading for their yield, a source said.

DexCom’s new low

DexCom’s 0.375% convertible notes due 2028 saw a flurry of activity on Friday as the notes hit a new outright low.

The notes gained in early trade after hitting an all-time low of 90.75 the previous session.

The 0.375% notes were seen changing hands at 91.125 versus a stock price of $101.19, according to a market source.

However, they resumed their downtrend and traded as low as 90.125 as the session progressed.

There was $8 million in reported volume.

DexCom’s stock traded to a low of $99.02 and a high of $102.11 before closing at $100.76, off 0.22%.

DexCom priced a $1.25 billion issue of the 0.375% convertible notes in early May.

The notes initially put in a strong performance in the aftermarket. However, they have been on a downtrend since the company reported earnings in late July.

The notes were trading around 103 heading into the earnings report. Stock has slumped about 30% since.

Fluor improves

Fluor’s recently priced 1.125% convertible notes due 2029 were on the rise on a strong day for the stock although the notes continue to rank among the underperforming issues of August.

The 1.125% notes gained about 1 point outright with stock up 3%.

The notes were changing hands at 98.75 versus a stock price of $33.92 in the late afternoon, according to a market source.

There was $11 million in reported volume.

Fluor’s stock traded to a low of $32.75 and a high of $34.15 before closing at $33.72, an increase of 2.99%.

While the 1.125% notes initially performed well after pricing in early August, they joined the ranks of other recent deals with 1% coupons that have underperformed in the aftermarket.

The notes traded down to their lowest level of 97.25 on Wednesday.

Mentioned in this article:

Affirm Holdings Inc. Nasdaq: AFRM

DexCom Inc. Nasdaq: DXCM

Fluor Corp. NYSE: FLR

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