Morning Commentary: SoFi Technologies convertibles active early; Snap trades continue

By Abigail W. Adams

Portland, Me., July 27 – It was a quiet but firm start to the day in the convertibles secondary space as equity indexes rallied on the heels of another blockbuster GDP report that blew past forecasts and a Personal Consumption Expenditures report that came in below expectations.

While equity indexes came in from the heights reached at the open, they continued their rally with the Dow Jones industrial average continuing to set records for a now 14-day streak of consecutive gains, assuming it closes in positive territory.

The Dow Jones industrial average was up 40 points, or 0.11%, the S&P 500 index was up 0.48%, the Nasdaq Composite index was up 0.95% and the Russell 2000 index was up 0.26% shortly before 11 a.m. ET.

“Everyone’s impressed by the equity rally,” a source said. “Now we’re waiting on new issuance.”

However, the primary market is expected to remain quiet until more companies emerge from their earnings season blackouts with reactivation expected in August, leaving July a paperless month for the market.

With no new issuance since American Water Capital Corp.’s $1.04 billion issue of 3.625% exchangeable notes due 2026 (Baa1/A-), trading volumes have been light.

There was $60 million in reported convertibles trading volume about one hour into the session with few names seeing concentrated trading activity.

SoFi Technologies Inc.’s 0% convertible notes due 2026 saw some action early in the session with the finance tech company scheduled to report earnings early next week.

The 0% notes were unchanged in early trade at 80 with a yield of 7.17%, a source said.

There was $4 million in reported volume.

SoFi’s stock was changing hands at $9.54, an increase of 0.16%, shortly before 11 a.m. ET.

Snap Inc.’s convertible notes remained active after the large movement of the previous session.

The serial convertible note issuer’s 0.125% convertible notes due 2028 were active early Thursday after taking a backseat to Snap’s shorter-duration notes the previous session.

The 0.125% notes were trading at 71.875 versus a stock price of $10.44 early in the session, according to a market source.

There was $3 million in reported volume.

Snap’s stock remained under pressure early Thursday after a 14% drop the previous session.

Stock was trading at $10.46, a decrease of 2.56%, shortly before 11 a.m. ET.

Snap’s convertible notes fell outright the previous session, although most tranches were moving in line dollar-neutral.

However, the 0.25% convertible notes due 2025, the shortest duration in the debt stack, outperformed on hedge with the notes adding 1 point dollar-neutral as they fell to a 93-handle, a source said.

The 0.25% notes were not active early Thursday.

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