Convertibles drift lower; Live Nation down outright, mixed on hedge; Expedia weakens

By Abigail W. Adams

Portland, Me., Sept. 22 – It was a red day in the convertibles secondary space as equity markets extended their slide and Treasury yields catapulted to new heights.

The Dow Jones industrial average closed Thursday down 107 points, or 0.35%, the S&P 500 index closed down 0.84, the Nasdaq Composite index closed down 1.37% and the Russell 2000 index closed down 2.26%.

Small cap and tech stocks were again taking the brunt of the sell-off as rising interest rates and recession red flags called into question future earnings growth and the ability to refinance debts.

“People are nervous,” a source said.

There was decent volume with $61 million on the tape about one hour into the session and $492 million in reported volume about one hour before the market close.

However, few names saw concentrated trading activity with a wide breadth to the names in play.

Live Nation Entertainment Inc.’s convertible notes were active early although they petered out as the session progressed.

Liberty Media Corp.’s 0.5% notes due 2050 exchangeable for Live Nation’s common stock and Live Nation’s 2% convertible notes due 2025 both fell outright.

However, they were mixed on hedge with the 0.5% exchangeables expanding while the 2% convertible notes contracted.

Expedia Inc.’s 0% convertibles due 2026 (Baa3/BBB-/BBB-) were lower in heavy volume.

After logging a large dollar-neutral expansion on Wednesday, Luminar Technologies Inc.’s 1.25% convertible notes due 2026 gave back much of their gains as stock sank double digits following an analyst downgrade.

Live Nation mixed

Live Nation convertible notes were active early in Thursday’s session although activity in the name declined as the session progressed.

Liberty Media’s 0.5% notes due 2050 exchangeable for Live Nation stock and Live Nation’s 2% convertible notes due 2025 both fell outright with stock under pressure.

However, they were mixed on hedge with the 0.5% exchangeables improved while the 2% convertible notes weakened.

The 0.5% exchangeables fell 4 points outright with stock off 4%.

The 0.5% exchangeables were changing hands at 106.75 versus a stock price of $79.55 early in the session, according to a market source.

The notes gained about 0.5 point dollar-neutral on the move down, a source said.

There was $4 million in reported volume.

Live Nation’s 2% convertible notes due 2025 were down 3 points outright.

They were seen at 105 versus an equity price of $79.51 early in the session.

However, the notes were weaker dollar-neutral, a source said.

There was $2 million in reported volume.

Live Nation’s stock traded to a high of $81.45 and a low of $77.09 before closing the day at $77.49, a decrease of 4.98%.

Live Nation’s stock was recently listed as a best short idea by hedge fund research firm Hedgeye.

Expedia lower

Expedia’s 0% convertible notes due 2026 were weaker in heavy volume on Thursday.

The notes were down about 1.5 points outright.

They were changing hands at 88.125 versus a stock price of $92.19 in the late afternoon, according to a market source.

There was $12.5 million in reported volume, making the notes the most active issue of Thursday’s session.

Expedia’s stock traded to a high of $99.01 and a low of $91.40 before closing the day at $92, a decrease of 7.08%.

Luminar reverses

Luminar’s 1.25% convertible notes due 2026 gave back much of their gains from the previous session as stock sank double digits following an analyst downgrade.

The 1.25% convertible notes made large gains on Wednesday with the notes up 5 points outright as stock fell 1.5%.

They saw a large dollar-neutral expansion, a source said.

However, the notes sank 8 points outright and contracted dollar-neutral as stock fell more than 15%.

While volume was light, the notes traded down to 65.

Luminar’s stock traded to a low of $7.42 and a high of $9.09 before closing the day at $7.86, a decrease of 16.12%.

Analysts have been sparring over Luminar’s stock with JPMorgan analysts recently giving the autonomous vehicle radar maker’s stock an overweight rating.

However, a Northland Securities analyst recently downgraded the stock to market perform from outperform due to the slow adoption of Luminar’s radar technology.

Mentioned in this article:

Expedia Inc. Nasdaq: EXPE

Live Nation Entertainment Inc. NYSE: LYV

Luminar Technologies Inc. Nasdaq: LAZR

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