Morning Commentary: Zendesk convertibles plunge in line with shares; primary quiet

By Rebecca Melvin

Concord, N.H., Oct. 29 – Zendesk Inc.’s convertibles plunged in line with the underlying shares in extremely active trading on Friday after the San Francisco-based customer service software company posted earnings and an all-stock acquisition.

The Zendesk 0.625% convertibles due 2025, of which $1 billion priced in June, fell nearly 18 points to 114.332 by 10.56 a.m. ET, according to Trace data.

Shares of the company were down $24.87, or 20.9%, to $94.14 at approximately the same time. At 11:15 a.m. ET, the shares were down at $94.37, or 20.7%.

There were $76.57 million of Zendesk convertible bonds that changed hands by about 11 a.m. ET, which accounted for more than half of total convertibles market trading. In all, $150.52 million of convertible bonds had changed hands.

The company’s shares were soft all week and solid earnings numbers did nothing to help out. Zendesk’s revenue grew 32%, beating analyst expectations. But the company also announced that it is acquiring Momentive Global Inc. in a $4.1 billion all-stock deal, representing a 12% premium to Momentive’s closing share price on Thursday.

There was only light trading in sundry other names elsewhere in the convertibles secondary market early Friday.

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