Accolade convertibles up outright; ViacomCBS sinks further; DraftKings, Ford below par

By Abigail W. Adams

Portland, Me., March 25 – The last new convertible bond deal of the week hit the secondary space on Thursday, capping another high-volume week for new deal activity with $4.2 billion pricing over nine deals.

Accolade Inc. priced $250 million of five-year convertible notes after the market close on Wednesday.

The new paper was making gains on an outright basis but was flat dollar-neutral on another choppy day for equities.

While equity benchmarks started the day in the red and wavered in intraday activity, they gained momentum heading into the close.

The Dow Jones industrial average closed the day up 199 points, or 0.62%, the S&P 500 index closed the day up 0.52% and the Nasdaq composite climbed back from a more than 1% slide in intraday activity to close the day up 0.12%.

While Accolade’s convertible notes were holding in the aftermarket, the pain on the new issue front continued for some recent deals with the pullback in equities taking its toll on the convertibles market.

ViacomCBS Inc.’s 5.75% series A mandatory convertible preferred stock continued to sink on an outright basis with the preferred stock now 20 points below its issue price.

DraftKings Inc.’s 0% convertible notes due 2028 and Ford Motor Co.’s 0% convertible notes due 2026 were below par in active trading on Thursday.

And Nio Inc.’s 0.5% convertible notes due 2027 traded down to an 82-handle.

Accolade up outright

Accolade priced $250 million of five-year convertible notes after the market close on Wednesday at par with a coupon of 0.5% and an initial conversion premium of 32.5%.

Pricing came at the cheap end of talk for a coupon of 0% to 0.5% and at the midpoint of talk for an initial conversion premium of 30% to 35%, according to a market source.

The new paper was volatile on an outright basis.

The 0.5% notes traded as low as 98 shortly after the opening bell.

However, they were wrapped around par about one hour after the opening bell.

The notes were making gains on an outright basis as stock caught a bid heading into the afternoon.

They were seen changing hands at 103.5 versus an equity price of $40.77 at the market close.

However, the notes were largely flat dollar-neutral and were marked at 99.875 bid on swap heading into the market close.

“Not a flyer but not really a loser either,” a source said.

Accolade’s stock traded to a high of $41.22 and a low of $36.25 before closing the day at $40.78, an increase of 7.03%.

ViacomCBS losses mount

While Accolade’s new convertible notes were holding in the aftermarket, losses continued to mount for ViacomCBS’ 5.75% series A mandatory convertible preferred stock.

The par-of-$100 preferred stock traded down to an $82 handle in early activity on Thursday after closing out the previous session on an $85-handle, according to a market source.

They continued to sink on an outright basis with the mandatories down to $80 in the late afternoon.

ViacomCBS’ stock was leading losses in equity markets.

Stock traded to a high of $70.19 and a low of $64.52 before closing the day at $66.35, a decrease of 5.35%.

Stock is down approximately 22% from the $85 public offering price of the secondary offering that priced concurrently with the mandatory convertible preferred stock.

Below par

Choppy equity markets continued to inflict pain on several recent issues with Ford’s 0% convertible notes due 2026 and DraftKings’ 0% convertible notes due 2028 joining the ranks of recent issues trading well below par.

Ford’s 0% convertible notes continued to trade on a 99-handle in active trading on Thursday.

The notes were changing hands at 99.375 versus an equity price of $12.33 heading into the market close.

There was about $20 million in reported volume.

Ford’s stock traded to a high of $12.35 and a low of $11.72 before closing the day at $12.32, an increase of 1.57%.

DraftKings’ 0% convertible notes due 2028 traded down to 98.875 in the late afternoon after closing out the previous week at 104.

There was more than $10 million in reported volume.

DraftKings’ stock traded to a high of $66.35 and a low of $62.52 before closing the day at $65.86, a decrease of 1.16%.

Nio’s 0.5% convertible notes due 2027 dropped another 2 points outright, despite stock making modest gains.

The 0.5% convertible notes closed Thursday at 82.25.

There was about $17 million in reported volume during the session.

Nio’s stock traded to a high of $39.19 and a low of $35.12 before closing the day at $37.94, a decrease of 2.65%.

Mentioned in this article:

Accolade Inc. Nasdaq: ACCD

DraftKings Inc. Nasdaq: DKNG

Ford Motor Co. NYSE: F

Nio Inc. NYSE: NIO

ViacomCBS Inc. Nasdaq: VIAC

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