Convertibles secondary ‘dead as a doornail’; Bill.com spikes; Intercept exchanges

By Abigail W. Adams

Portland, Me., Aug. 19 – It was “dead as a doornail” in the convertibles secondary space on Friday as selling pressure returned to equities with the market reassessing its rate hike forecast and options expirations driving additional volatility.

While equity indexes were deep-in-the-red on Friday, it did little to move the needle in the convertibles secondary space with few names seeing concentrated trading activity.

The Dow Jones industrial average closed Friday down 292 points, or 0.86%, the S&P 500 index closed down 1.29%, the Nasdaq Composite index closed down 2.01% and the Russell 2000 index closed down 2.17%.

There was $21 million in reported volume about one hour into the session and $337 million on the tape about one hour before the market close.

Bill.com Holdings Inc. was an outlier on a red day with the company’s stock among the best performers in equity markets following a large earnings beat and strong guidance.

The 0% convertible notes due 2027 spiked on an outright basis alongside stock.

Euronet Worldwide Inc.’s 0.75% convertible notes due 2049 (BBB) were weaker in high-volume activity with the notes the most actively traded of the day.

Intercept Pharmaceuticals Inc.’s 3.5% convertible notes due 2026 were active with the notes trading in a wide range after the company announced a privately negotiated exchange for the majority of the outstanding notes.

Bill.com spikes

It was a relatively dull day in the secondary space with volume light and few notable price movements with the exception of one name – Bill.com.

Bill.com’s 0% convertible notes due 2025 spiked on an outright basis with stock among the best performers in equity markets following a large earnings beat and strong guidance.

The 0% notes rose 12 points outright with stock up more than 15%.

The notes were changing hands at 131.25 versus a stock price of $173.09 in the late afternoon, according to a market source.

There was $14 million in reported volume.

Bill.com’s stock traded to a low of $165.66 and a high of $177.71 before closing the day at $174.29, an increase of 16.66%.

Stock surged after the software company announced losses per share of 3 cents versus analyst expectations for losses of 14 cents.

Revenue was $200.22 million versus analyst expectations for revenue of $183.10 million.

The company also issued strong guidance with first-quarter revenue of $208 million to $211 million and earnings per share of 5 to 7 cents expected.

Euronet weaker

Euronet’s 0.75% convertible notes due 2049 were weaker in high-volume activity on Friday.

The 0.75% notes were down about 1 point outright with the majority of trades at 98.875, according to a market source.

There was $26 million in reported volume, making the notes the most actively traded issue during Friday’s session.

Euronet’s stock traded to a high of $102.10 and a low of $99.17 before closing the day at $100.34, a decrease of 1.63%.

Intercept exchanges

Intercept’s 3.5% convertible notes due 2026 were active and trading in a wide range after the company announced a privately negotiated exchange that retired the majority of the outstanding principal amount of the notes.

The 3.5% convertible notes traded as low as 115 and as high as 121 on Friday, according to Trace data.

There was $10 million in reported volume.

Intercept’s stock traded to a high of $21.25 and a low of $17.58 before closing the day at $17.74, a decrease of 9.95%.

The pharmaceutical company announced on Friday that it was buying back $327.9 million of the principal amount of its 3.5% notes for $222 million in cash and 9.4 million shares, Prospect News reported.

The buyback reduces the outstanding principal balance of the notes to $172.1 million.

Intercept issued the 3.5% notes in August 2021, in part, through a privately negotiated exchange with holders of its 3.25% convertibles due 2023 and 2% convertibles due 2026.

Mentioned in this article:

Bill.com Holdings Inc. Nasdaq: ICPT

Euronet Worldwide Inc. Nasdaq: EEFT

Intercept Pharmaceuticals Inc. Nasdaq: ICPT

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