Convertibles secondary trading quiet; Western Digital active; Theravance down outright

By Abigail W. Adams

Portland, Me., June 30 – It was a quiet end to the quarter in the convertibles secondary space with portfolio clean-up the main driver of activity in the space.

Equity markets also saw a quiet end to the second quarter with the S&P 500 index again notching a fresh record with a nominal gain while the Nasdaq Composite retreated slightly from its record heights.

The Dow Jones industrial average closed the day up 210 points, or 0.61%, the S&P 500 closed the day up 0.13% and the Nasdaq Composite finished down 0.17%.

The Russell 2000 small cap index closed the day up 0.07%.

There was $63 million in reported volume a little over one hour into the session and $371 million in reported volume about one hour before the market close.

Western Digital Corp.’s 1.5% convertible notes due 2024 were the most actively traded name in the secondary space although with little movement in terms of price.

Theravance Biopharma Inc.’s 3.25% convertible notes due 2023, an off-the-run name that rarely trades, was active on Wednesday with the notes trading down outright.

Etsy Inc.’s 0.25% convertible notes due 2028 also continued to trade with the notes making solid gains over the past week.

Western Digital eyed

Western Digital’s 1.5% convertible notes due 2024 were active on Wednesday although with little movement in price.

The notes traded as high as 107 early in the session. They were changing hands at 106.75 in the late afternoon, according to a market source.

There was more than $17.5 million in reported volume.

Western Digital’s stock traded to a high of $72.14 and a low of $70.29 before closing the day at $71.17, an increase of 0.74%.

Theravance down outright

Theravance’s 3.25% convertible notes due 2023 made an appearance on the tape on Wednesday with the notes trading down outright.

The notes dropped about 1 point outright with stock off over 3%.

They were changing hands just shy of 95 versus a stock price of $14.81 in the late afternoon.

There was more than $9 million in reported volume.

Theravance’s stock traded to a high of $15.18 and a low of $14.46 before closing the day at $14.52, a decrease of 3.26%.

While activity in the name has been light, the notes have been on a downward spiral throughout June as the biopharmaceutical company has met with a series of analyst downgrades, price target cuts, and disappointments during clinical trials.

The company was working on a drug to treat acute lung injury caused by Covid-19 but announced last week that it had failed in clinical trials.

Stock was also under pressure last week after it priced a secondary offering of 6.7 million shares at $15.00 per share.

Etsy’s run

Etsy’s 0.25% convertible notes due 2028 continued to trade on Wednesday.

While the notes were little changed, they have seen a solid run on an outright and dollar-neutral basis over the past week.

The 0.25% notes continued to trade on a 109-handle.

They were changing hands at 109.5 versus a stock price of $203.80 early in the session. They remained at that level heading into the afternoon.

There was more than $8 million in reported volume heading into the market close.

Etsy’s stock traded to a high of $206.62 and a low of $201.36 before closing the day at $205.84, an increase of 1.63%.

The notes have gained more than 5 points outright and expanded about 0.375 point dollar-neutral over the past week, according to a market source.

The market hedge for the notes is 78%, a source said.

Etsy’s stock surged on Monday after the Brooklyn, N.Y.-based handmade and vintage item e-commerce company announced it was acquiring Elo7, a Brazilian e-commerce site, for $217 million.

Mentioned in this article:

Etsy Inc. Nasdaq: ETSY

Theravance Biopharma Inc. Nasdaq: TBPH

Western Digital Corp. Nasdaq: WDC

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