Coinbase gains; ON Semiconductors on the rise; Southwest Airlines active; Peloton up

By Abigail W. Adams

Portland, Me., May 20 – The convertibles secondary space was active amid an improved tone as equity benchmarks snapped three days of losses.

The Dow Jones industrial average closed the day up 188 points, or 0.55%, the S&P 500 index was up 1.06% and the Nasdaq Composite was up 1.77%.

There was $871 million in reported convertibles trading volume at the market close.

However, activity was centered on two names – Coinbase Global Inc. and Southwest Airlines Co.

Coinbase’s 0.5% convertible notes due 2026 improved on an outright and dollar-neutral basis as stock recovered from Wednesday’s sell-off and Bitcoin stabilized.

Southwest Airlines’ 1.25% convertibles due 2025 (Baa1/BBB) also saw heavy volume although with little movement in price.

ON Semiconductor Corp.’s 0% convertible notes due 2027, the most recent deal to price at par with a 0% coupon, was on the rise in active trading with the deal’s greenshoe recently exercised in full.

Several other embattled “No-Nos” were also posting gains as their stock caught a bid.

Peloton Interactive Inc.’s 0% convertible notes due 2026 improved in active trading as stock continued to bounce off its lows.

Coinbase gains

Coinbase’s 0.5% convertible notes due 2026 improved on an outright and dollar-neutral basis after a brutal aftermarket debut on Wednesday.

The 0.5% convertible notes popped above their discounted issue price of 99.

They were changing hands at 99.625 bid, par offered early in the session with stock up almost 4%.

The notes were wrapped around par heading into the market close.

While the notes, which closed Wednesday on a 97-handle, improved outright, they gave back some of their dollar-neutral gains early in the session.

The notes were seen contracted about 0.25 to 0.375 point dollar-neutral on the move up, a source said.

However, the notes were seen improved about 0.25 point dollar-neutral in the afternoon.

Despite large outright losses, the notes expanded upwards of 1 point on their aftermarket debut on Wednesday.

There was more than $51 million on the tape heading into the market close on Thursday.

Coinbase’s stock traded to a high of $238.80 and a low of $226.26 before closing the day at $233.40, an increase of 3.83%.

The price of Bitcoin also stabilized following Wednesday’s sell-off. While the digital currency gave back some of its early gains, it held above $40,000 and was changing hands at $40,534, an increase of 3.38%, at the close of equity markets.

Coinbase, a crypto-currency trading platform, priced its debut convertible notes offering as Bitcoin plummeted to its lowest level in nearly four months.

The heavy selling pressure caused outages of several crypto-trading platforms including Coinbase’s.

While the company was hoping to become the latest issuer to price at par with a 0% coupon, the deal priced at the cheap end of the 0% to 0.5% coupon range and with a discounted issue price of 99.

ON Semiconductor gains

ON Semiconductor’s 0% convertible notes due 2027 improved on both an outright and dollar-neutral basis on Thursday.

The 0% notes, which have largely traded below par since their aftermarket debut on May 12, hit their highest outright level since pricing.

The notes were changing hands at 102 versus a stock price of $38.65 in the late afternoon.

They improved about 0.375 to 0.625 point dollar-neutral, a source said.

There was about $18.4 million in reported volume during Thursday’s session.

ON Semiconductor’s stock traded to a low of $37.59 and a high of $38.72 before closing the day at $38.53, an increase of 2.86%.

The greenshoe on the 0% notes was recently exercised in full raising the total size of the deal to $805 million.

Southwest active

Southwest Airlines’ 1.25% convertibles due 2025 (Baa1/BBB) saw heavy volume on Thursday although with little movement in price.

The 1.25% convertible notes were trading at 167.25 early in the session.

They were changing hands at 164.75 versus a stock price of $59.97 in the late afternoon.

There was more than $56.5 million on the tape during Thursday’s session.

Southwest Airlines’ stock traded to a high of $60.92 and a low of $59.29 before closing the day at $59.92, a decrease of 0.78%.

Peloton improves

Several embattled “No-Nos” improved on Thursday as stock caught a bid.

Peloton’s 0% convertible notes due 2026 gained about 1 point outright as stock continued to bounce off its recent lows.

The 0% notes were changing hands at 93.5 versus a stock price of $100.39 at the market close. There was $15 million in reported volume.

Peloton’s stock traded to a low of $97.80 and a high of $100.75 before closing the day at $100.46, an increase of 4.05%.

Peloton’s stock gained after the company announced a software fix for its Tread and Tread+ products following a recall earlier in the month which sent stock plummeting.

Mentioned in this article:

Coinbase Global Inc. Nasdaq: COIN

ON Semiconductor Corp. Nasdaq: ON

Peloton Interactive Inc. Nasdaq: PTON

Southwest Airlines Co. NYSE: LUV

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