SoFi Technologies convertible notes in focus, gain on earnings; Illumina paper active

By Abigail W. Adams

Portland, Me., July 31 – The convertibles primary market remained dormant on Monday with July set to close with no new issuance.

While there has been a notable uptick of activity in the primary market in 2023, there are only two years in the past two decades that July has passed with no new issuance – 2022 and 2001, according to the Prospect News database.

There are deals in the pipeline, and with companies emerging from blackout periods, debt maturities looming, and a supportive equity and credit backdrop, the primary market is expected to reactivate shortly, sources said.

Sources expect the pace of issuance in the second half of 2023 to outstrip the first half; however, issuance thus far has fallen short of expectations.

Sources will be paying close attention to the deal terms of the first offering to break the primary market’s silence.

“Everyone wants to see what the pricing will look like,” a source said. “Will it be aggressive? Are they going to try to soak the market when it’s dry?”

Meanwhile, the secondary space saw average trading volume on Monday as equity indexes wavered between gains and losses before closing the day mixed.

The Dow Jones industrial average closed Monday down 0.48 point, or 0%, the S&P 500 index closed down 0.10%, the Nasdaq Composite index closed down 0.01% and the Russell 2000 index closed up 0.90%.

There was $340 million of convertibles trading on the tape about one hour before the market close with earnings and end-of-month rebalancing driving trading activity.

SoFi Technologies Inc.’s 0% convertible notes due 2026 were the trade of the day with the notes making large outright gains and expanding dollar-neutral on an earnings beat.

Illumina Inc.’s soon-to-mature 0% convertible notes due Aug. 15, 2023 (BBB) also saw heavy volume with end-of-life trades.

SolarEdge Technologies Inc.’s 0% convertible notes due 2025 were active on Monday with the notes staring down earnings on Tuesday.

SoFi’s earnings

SoFi’s 0% convertible notes due 2026 were the trade of the day with the notes making large outright gains and expanding dollar-neutral post-earnings.

The 0% convertible notes gained 5.5 points outright with stock up about 20% to hit a new 52-week high.

The 0% notes were changing hands at 84.75 early in the session and 85.5 in the late afternoon.

They expanded about 0.5 point dollar-neutral, a source said.

There was $20 million in reported volume.

SoFi’s stock traded to a low of $10.30 and a high of $11.70 before closing at $11.45, an increase of 19.90%.

Stock popped after the online finance company posted a large earnings beat and upped its forward guidance.

SoFi posted losses per share of 6 cents versus analyst expectations for losses per share of 7 cents on revenue of $498 million versus analyst expectations for revenue of $486 million.

The company now expects full-year revenue of $1.97 billion to $2.03 billion, up from its previous guidance of $1.96 billion to $2.02 billion.

Illumina’s end-of-life

Illumina’s 0% convertible notes due Aug. 15, 2023 saw heavy volume as their end-of-life approaches.

The 0% convertible notes were trading at 99.75 in the late afternoon, according to a market source.

There was $30 million in reported volume.

The notes were trading for “pennies” in profit, a source said.

However, some were chasing the short money trade.

SolarEdge active

SolarEdge’s 0% convertible notes due 2025 saw some action on Monday as accounts prepositioned for the smart energy technology company’s earnings report.

The 0% notes added about 2 points outright with stock up about 2%.

They were changing hands at 111 in the late afternoon, according to a market source.

SolarEdge’s stock traded to a low of $235 and a high of $244 before closing at $241.46, up 1.97%.

The company is scheduled to release earnings on Tuesday.

Mentioned in this article:

Illumina Inc. Nasdaq: ILMN

SoFi Technologies Inc. Nasdaq: SOFI

SolarEdge Technologies Inc. Nasdaq: SEDG

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