Morning Commentary: Convertibles secondary rips higher on light volume; Datadog gains

By Abigail W. Adams

Portland, Me., Nov. 10 – The convertibles secondary space was awash in green on Thursday as risk assets ripped higher following the release of October’s Consumer Price Index report, which reflected a higher deceleration of inflation than anticipated.

In a dramatic shift of market sentiment, equity indexes roared to the upside and stood poised to post historic single-day gains.

The Dow Jones industrial was up 930 points, or 2.85%, the S&P 500 index was up 4.38%, the Nasdaq Composite index was up 5.86% and the Russell 2000 index was up 5.61% shortly after 11 a.m. ET.

While it was a strong day in the convertibles secondary space, volume remained light with $80 million on the tape about one hour into the session.

Datadog Inc.’s 0.125% convertible notes due 2025 were “big winners” on Thursday with the notes making large gains on an outright and dollar-neutral basis.

The 0.125% notes jumped 8 points outright with stock up more than 10%.

The convertibles were changing hands at 112.125 early in the session.

The notes expanded 1.5 points to 1.75 points on hedge, a source said.

Datadog’s stock was seen at $76.81, an increase of 14.18%, shortly before 11 a.m. ET.

The surge comes the day after stock hit a 52-week low of $66.45.

Stock surged following reports that Datadog’s board chairman purchased 710,000 shares earlier in the week, a source said.

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