Morning Commentary: Airbnb convertibles gain; Affirm active on buyback; Avaya files

By Abigail W. Adams

Portland, Me., Feb. 15 – While the convertibles primary market remained dormant early Wednesday with the window of opportunity for new issuance narrowing, there was an uptick of activity in the convertibles secondary space with topical news driving activity in outstanding issues.

Equity indexes remained indecisive early Wednesday with investors continuing to question the Federal Reserve’s future rate hike schedule.

Indexes turned mixed after again fighting off strong losses at the open with the Dow Jones industrial average down 163 points, or 0.43%, the S&P 500 index down 0.49%, the Nasdaq Composite index down 0.32% and the Russell 2000 index up 0.01% shortly before 11 a.m. ET.

Airbnb Inc.’s 0% convertible notes due 2026 were in focus in early trade with the notes making gains as stock soared post-earnings.

Affirm Holdings Inc.’s 0% convertible notes due 2026 continued their strong upward momentum in heavy volume as the company formally announced what many had speculated – a repurchase of a portion of the notes.

Avaya Holdings Corp.’s 2.25% convertible notes due June 15, 2023 were also active on the tape after the company filed for bankruptcy protection.

The notes now enter a new chapter in a story of alleged financial malfeasance with the company facing litigation for what plaintiffs describe as a “massive fraud” perpetrated to secure financing to refinance the notes.

Airbnb’s earnings

Airbnb’s 0% convertible notes due 2026 were in focus early Wednesday with the notes gaining outright as stock soared following earnings.

The 0% notes, which had made steady gains heading into earnings, gained another 1 point outright to trade on an 88-handle.

The notes were changing hands at 88.375 versus a stock price of $134.29 early in the session, according to a market source.

The yield was about 4%.

There was $19 million in reported volume.

Airbnb’s stock traded up to $135.68, an increase of 12.25%, shortly before 11 a.m. ET.

Affirm’s buyback

Affirm’s 0% convertible notes due 2026 continued their strong upward momentum on Wednesday after the company announced a partial repurchase of the notes.

The 0% notes gained almost 2 points outright.

They were changing hands at 69.75 early in the session with the yield 9.875%.

There was $12 million in reported volume.

Affirm’s stock also saw double digit gains on Wednesday with stock trading at $14.48, an increase of 10.46%.

Affirm announced Tuesday that it had entered into privately negotiated transactions to repurchase $229 million in principal of the 0% notes for $158 million in cash.

Avaya active

Avaya’s 2.25% convertible notes due June 15, 2023 were active early Wednesday after the company announced it had filed for bankruptcy protection.

The 2.25% notes traded in a wide range of 4 to 6 early in the session with the yield over 6,000%.

There was $8 million in reported volume.

Avaya’s 8% exchangeable notes due 2027 have been inactive with the last reported sales price more than two weeks ago at 34.5 bid, 35 offered, a source said.

The 8% exchangeable notes were issued as a private placement as part of a series of refinancing transactions undertaken to refinance the 2.25% notes.

Avaya is facing litigation for the financial picture of the company painted for investors to secure the financing in July 2022.

Avaya issued a going-concern statement a short time later.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.