Morning Commentary: Convertibles secondary trading quiet at open; Limelight plummets

By Abigail W. Adams

Portland, Me., Oct. 23 – The convertibles secondary space saw another quiet open after a full week with no new paper.

The week’s sole prospective offering, Clarus Corp.’s $85 million offering of convertible senior notes, was cancelled due to market volatility, the company said in a press release.

“Hedgies got burned,” a source said.

Meanwhile, equity benchmarks stood poised for another volatile session with focus on earnings and stimulus negotiations.

Limelight Networks Inc.’s 3.5% convertible notes due 2025 plummeted in early trading following its third-quarter earnings report.

The 3.5% notes dropped more than 15 points outright with stock down almost 30%.

While volume was light, the small and illiquid issue dropped to 88.5 early in the session.

Limelight stock traded down to $4.42, a decrease of 28.5%, shortly before 11 a.m. ET.

The content delivery service provider reported losses per share of 1 cent. Analysts were expecting a profit of 2 cents.

While the company missed on the bottom line, it beat on the top with revenue of $59.2 million versus analyst expectations for revenue of $58.94 million.

Stock also dropped on weak guidance with the company expecting revenue of $230 million to $240 million for the fiscal year and losses per share of 2 cents to earnings of 8 cents.

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