SoFi convertible notes gain; Ford comes in; Pioneer active; Zogenix jumps on buyout

By Abigail W. Adams

Portland, Me., Jan. 19 – It was another heavy day in the convertibles secondary space as equity markets wavered between positive and negative territory before closing the day with steep losses.

The Dow Jones industrial average closed the day down 340 points, or 0.96%, the S&P 500 index closed down 0.97%, the Nasdaq Composite fell into correction territory and ended the day down 1.15% and the Russell 2000 index closed down 1.6%.

The 10-year Treasury yield traded as high as 1.9% before closing the day down slightly at 1.854%.

The convertibles secondary space continued to see selling pressure with holders taking profits where they were able to, a source said.

While the overall convertibles market was weak, there were several large moves to the upside in the space.

Pioneer Natural Resources Co.’s 0.25% convertible notes due 2025 were active as the energy company’s stock hit a new 52-week high.

SoFi Technologies Inc.’s 0% convertible notes due 2026 were another bright spot in the session with the notes making large gains on an outright and dollar-neutral basis as stock soared.

Zogenix Inc.’s 2.75% convertible notes due 2027 skyrocketed on news the company would be acquired.

However, Ford Motor Co.’s 0% convertible notes due 2026 were coming in as stock gave back some of its gains following last week’s surge.

Profit-taking

Pioneer Natural Resources’ 0.25% convertible notes due 2025 were active on Wednesday as stock hit a new 52-week high.

The 0.25% notes gained 3 points outright with stock up more than 1%.

The notes were changing hands at 207.5 in the late afternoon.

The notes move on heavy delta of 95% and were trading in line with stock, a source said.

Pioneer was one of only 50 companies on the New York Stock Exchange to set a 52-week high during Wednesday’s session.

Holders were taking profits where they were able.

Stock traded to a low of $215.02 and a 52-week high of $219.39 before closing the day at $219.06, an increase of 1.37%.

The energy company’s stock has surged over the past week as crude oil futures hit their highest level in seven years amid rising geopolitical tensions, production problems from OPEC nations, and a projected increase in demand.

WTI crude oil futures settled at $86.40, an increase of 97 cents or 1.14%.

SoFi in focus

SoFi Technologies’ 0% convertible notes due 2026 were a bright spot in a heavy market on Wednesday with the notes making large gains on an outright and dollar-neutral basis.

The 0% notes gained about 6 points outright with stock up more than 12%.

The notes were changing hands at 98 versus a stock price of $13.54 early in the session, according to a market source. They were trading at 98.5 in the late afternoon.

The notes expanded 0.5 to 0.75 point dollar-neutral on the move up, a source said.

SoFi’s stock traded to a high of $14.39 and a low of $13.37 before closing the day at $13.71, an increase of 13.68%.

Stock soared on news the personal finance company had passed a key regulatory hurdle to becoming a bank holding company.

Ford comes in

Ford’s 0% convertible notes due 2026 were coming in on Wednesday as stock took a “round trip,” after hitting its highest level in almost two years last week, a source said.

The 0% convertible notes were down 8 points outright with stock off almost 8%.

They were changing hands just north of 146 in the late afternoon.

The notes contracted about 0.25 point dollar-neutral, a source said.

Ford’s stock traded to a high of $24.92 and a low of $22.42 before closing the day at $22.45, a decrease of 7.92%.

Ford surpassed a $1 trillion company last week as it ramped up production of its electric pick-up truck.

However, stock has been on a downward trajectory since as broader markets sold off.

Zogenix’s buyout

Zogenix’s 2.75% convertible notes due 2027 soared on Wednesday with the company the target of the first acquisition to be announced in the biotech space in 2022.

The 2.75% convertible notes rose 26 points outright on the news.

They were changing hands at 123 in the late afternoon.

The notes, which were trading according to the takeout matrix, stood to gain about 1 point dollar-neutral on the buyout, a source said.

Zogenix’s stock traded to a high of $26.57 and a low of $25.87 before closing the day at $25.92, an increase of 65.73%.

News broke prior to the market open that Belgium-based pharmaceutical company UCB SA planned to purchase Zogenix for $26 per share.

The convertible notes will be taken out in the transaction, which is expected to close in the second quarter.

Mentioned in this article:

Ford Motor Co. NYSE: F

Pioneer Natural Resources Co. NYSE: PXD

SoFi Technologies Inc. Nasdaq: SOFI

Zogenix Inc. Nasdaq: ZGNX

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