Morning Commentary: Lithium Americas prices convertible notes; secondary quiet early

By Abigail W. Adams

Portland, Me., Dec. 2 – New paper remained in focus in the secondary space on Thursday as Lithium Americas Corp.’s newly priced 1.75% convertible notes due 2027 made their aftermarket debut.

Lithium Americas priced $225 million of five-year convertible notes after the market close on Wednesday at par with a coupon of 1.75% and an initial conversion premium of 35%, according to a press release.

Pricing came at the rich end of talk for a coupon of 1.75% to 2.25% and an initial conversion premium of 30% to 35%, according to information from a market source.

The new paper was not seen on Trace early in the session.

Meanwhile, volumes remained light in the secondary space as equity benchmarks recovered from the previous bout of selling pressure.

The Dow Jones industrial average was up 527 points, or 1.55%, the S&P 500 index was up 1.17%, the Nasdaq Composite was up 0.58% and the Russell 2000 index was up 1.35%.

While equity benchmarks recovered, growth stocks remained under pressure with the 0% convertible bonds of several high-growth names continuing to struggle below par.

DigitalOcean Inc.’s 0% convertible notes due 2026 were down another 4 points outright to 92.5 early in Thursday’s session.

The company’s stock traded down to $86.20, a decrease of 1.44%, shortly after 11 a.m. ET.

While there was pain in the convertibles market, “outright accounts aren’t puking yet,” a source said.

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