Lithium Americas convertibles expand on debut; Affirm, Bilibili drop further below par

By Abigail W. Adams

Portland, Me., Dec. 2 – New paper remained in focus in the secondary space on Thursday as Lithium Americas Corp.’s newly priced 1.75% convertible notes due 2027 made their aftermarket debut.

The new paper was performing well in the aftermarket with the notes trading up on an outright and dollar-neutral basis.

Equity markets rallied on Thursday with indexes paring their losses from a two-day route. The Dow Jones industrial average closed the day up 619 points, or 1.82%, the S&P 500 index finished up 1.42%, the Nasdaq Composite closed up 0.83% and the Russell 2000 index closed 2.86% higher.

However, growth stocks remained under pressure with the 0% convertible bonds of several high-growth names falling further below par.

Affirm Holdings Inc.’s 0% convertible notes due 2026 and Bilibili Inc.’s 0.5% convertible notes due 2026 hit their lowest outright levels since pricing as stock continued to decline.

DraftKings Inc.’s 0% convertible notes due 2028 were active on a volatile day for the gaming company’s stock with the notes contracting in high-volume activity.

While there continued to be a lot of pain in the convertibles market, “outright accounts aren’t puking yet,” a source said. Many continued to hold amid the volatility.

Lithium Americas eyed

Lithium Americas priced $225 million of five-year convertible notes after the market close on Wednesday at par with a coupon of 1.75% and an initial conversion premium of 35%, according to a press release.

Pricing came at the rich end of talk for a coupon of 1.75% to 2.25% and an initial conversion premium of 30% to 35%, according to information from a market source.

The new paper was in focus in the secondary space and performing well on debut.

The 1.75% notes were seen changing hands at 101.25 versus a stock price of $34.41 in the late afternoon.

The notes expanded about 2 points dollar-neutral, a source said.

There was about $60 million in reported volume.

Lithium Americas’ stock traded to a high of $35.16 and a low of $33.62 before closing the day at $34.44, a decrease of 1.29%.

New lows

Several recently priced convertible notes continued to trade down alongside their equities despite the strength in the overall market.

Affirm’s 0% convertible notes due 2026 and Bilibili’s 0.5% convertible notes due 2026 hit their lowest outright level since pricing two weeks ago.

Affirm’s 0% convertible notes traded down about 1 point with stock off another 2%.

The notes were changing hands at 95.25 versus an equity price of $115.11 in the late afternoon.

There was about $12 million in reported volume.

Affirm’s stock traded to a high of $119.99 and a low of $111.28 before closing the day at $113.75, a decrease of 2.42%.

Affirm priced a $1.725 billion issue of the 0% convertible notes at par on Nov. 18.

Bilibili’s 0.5% convertible notes fell 3.5 points with equity off more than 5%.

The 0.5% notes were changing hands at 92.375 versus an equity price of $58.36 in the late afternoon.

There was about $11 million in reported volume.

Bilibili’s American Depositary Shares traded to a high of $62.59 and a low of $57.01 before closing the day at $59.17, a decrease of 5.4%

The Shanghai-based video sharing website priced a $1.6 billion issue of the 0.5% notes at par on Nov. 18.

Asian names, in general, were under pressure on Thursday as the Securities and Exchange Commission finalized rules allowing it to delist foreign stocks.

China has been pressuring DiDi Global Inc. to delist from the New York Stock Exchange, citing security concerns as reason for the request.

DraftKings contracts

DraftKings’ 0% convertible notes due 2028 were active on Thursday on a volatile day for the company’s stock.

While the notes were largely unchanged outright, they contracted dollar-neutral.

The 0% convertible notes were changing hands at 77.25 versus an equity price of $31.27 in the late afternoon.

They contracted about 0.25 point on hedge.

DraftKings’ stock traded to a high of $32.55 and a low of $30.41 before closing the day at $31.30, an increase of 0.19%.

Stock whipsawed between gains and losses after short-seller Jim Chanos announced his short position in the company.

Mentioned in this article:

Affirm Holdings Inc. Nasdaq: AFRM

Bilibili Inc. Nasdaq: BILI

DraftKings Inc. Nasdaq: DKNG

Lithium Americas Corp. NYSE: LAC

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