Convertibles primary remains dormant; Alteryx in focus, expands; Livent gains continue

By Abigail W. Adams

Portland, Me., Oct. 6 – The convertibles primary market was again dormant on Tuesday, which was a wild day for equity markets.

October and November are projected to be busy months for the primary market with an active pipeline of new deals, a source said.

However, many issuers are in earnings season blackout, and a pickup in new deal activity is not expected until at least two weeks.

Meanwhile, the secondary space saw an uptick of activity on Tuesday as volatility again roiled markets.

Equity markets wavered between gains and losses ahead of Federal Reserve chairman Jerome Powell’s speech early in the session, logged gains in intraday activity, and saw a dramatic reversal heading into the market close.

Markets saw a steep sell-off as president Donald Trump announced an end to stimulus talks until after the November election.

The Dow Jones industrial average closed Tuesday down 375 points, or 1.34%, the S&P 500 index was down 1.4%, and the Nasdaq composite was down 1.57%.

There was about $91 million in reported volume one hour into the session and $673 million on the tape at the market close.

Alteryx Inc.’s convertible notes were in focus with the notes making large gains on an outright and dollar-neutral basis after the company announced a leadership shakeup and raised its third-quarter guidance.

Livent Corp.’s 4.125% convertible notes due 2025 again saw high-volume activity with their upward momentum continuing.

Medallia Inc.’s 0.125% convertible notes due 2025 were also active on Tuesday with the notes hitting their highest outright level since pricing in mid-September.

Alteryx expands

Alteryx’s convertible notes were in focus on Tuesday with the notes making large gains on an outright and dollar-neutral basis as stock skyrocketed.

The computer software company’s 1% convertible notes due 2026 jumped more than 12 points outright with stock up more than 25%.

The notes were changing hands at 112.875 on Tuesday.

They looked to be expanded about 2.5 points early in the session, a source said.

Another source saw them up about 0.5 point dollar-neutral in the late afternoon.

The bonds saw more than $17 million in reported volume.

While less active, Alteryx’s 0.5% convertible notes due 2024 jumped 10 points outright to 108.875.

The 0.5% convertible notes were largely unchanged dollar-neutral, a source said.

Both issues were below par for much of September.

Alteryx’s stock traded to a high of $148 and a low of $137.40 before closing the day at $145.96, an increase of 28.24%.

Stock skyrocketed after the company announced a shakeup in its leadership and raised its revenue guidance.

Alteryx announced that Mark Anderson, former president of Palo Alto Networks Inc., would succeed Dean Stoecker as chief executive officer.

Revenue guidance was increased to $126 million to $128 million from the previous range of $111 million to $115 million.

Analysts had been expecting revenue of $113.5 million, MarketWatch reported.

Livent gains continue

Livent’s 4.125% convertible notes due 2025 remained active in the secondary space with the notes’ upward momentum continuing.

The 4.125% notes were up another 4 points outright with stock up more than 2% prior to the late afternoon sell-off.

They were changing hands at 151.5 in the late afternoon.

The notes were again improved dollar-neutral, a source said.

There was $29 million in reported volume during Tuesday’s session.

Livent’s stock traded to a high of $12.18 and a low of $11.06 before closing the day at $11.42, an increase of 1.24%.

The small, off-the-run issue has been making large gains in heavy volume since Monday due to Tesla Inc.’s initiative to manufacture its own batteries for its electric vehicles, which run off of lithium.

The notes jumped more than 20 points outright and 3 points dollar-neutral during Monday’s session.

There is speculation that Livent may become a supplier for Tesla, a source previously said.

Medallia improves

Medallia’s 0.125% convertible notes due 2025 were also major volume movers on Tuesday with the notes posting gains on an outright and dollar-neutral basis.

The 0.125% notes rose more than 4 points outright with stock up more than 5% in intraday activity.

They were changing hands at 104.5 in the late afternoon.

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

There was more than $12 million on the tape by the market close.

Medallia’s stock traded to a high of $30 and a low of $28.30 before closing the day at $28.88, an increase of 3.03%.

Stock was posting gains after the customer experience management software company announced it had extended its partnership with Softbank Corp.

While the 0.125% convertible notes initially gained in the aftermarket after pricing on Sept. 15, they quickly dropped below par due to weakness in stock.

However, the notes have been on the rise over the past two weeks with Tuesday marking the highest outright level for the notes since they priced.

Mentioned in this article:

Alteryx Inc. NYSE: AYX

Livent Corp. NYSE: LTHM

Medallia Inc. NYSE: MDLA

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