Ormat convertible notes add to gains; Cytokinetics on the rise; Coinbase under pressure

By Abigail W. Adams

Portland, Me., July 26 – It was a weak day in the convertibles secondary space as a risk-off sentiment swept through markets on the eve of another historic rate increase from the Federal Reserve.

Equity indexes were firmly in the red on Tuesday after the latest batch of earnings, which reflected some high-profile disappointments.

The Dow Jones industrial average closed Tuesday down 229 points, or 0.71%, the S&P 500 index closed down 1.15%, the Nasdaq Composite index closed down 1.87% and the Russell 2000 index closed down 0.69%.

While risk assets were weak on Tuesday following earnings misses from the likes of Walmart and GM, results thus far have been mixed, which have contributed to a highly uncertain market.

And while the convertibles secondary space was weak on Tuesday after rebounding over the past two weeks, volume remained light.

With no new paper since late June, there was not a lot to spark investor interest, sources said.

There was $50 million of convertibles trading on the tape about one hour into the session and $335 million in reported volume about one hour before the market close.

While the primary market was again dormant with July poised to be a paperless month, the last two deals to price continued to perform well in secondary market activity.

Cytokinetics Inc.’s 3.5% convertible notes due 2027 resumed their upward momentum after falling the previous week.

Ormat Technologies Inc.’s 2.5% convertible notes due 2027 added to their outright gains despite the heaviness in the market.

Coinbase Global Inc.’s 0.5% convertible notes due 2026 were under pressure following news the Securities and Exchange Commission had launched an investigation into the company.

Cytokinetics gains

Cytokinetics’ 3.5% convertible notes due 2027 resumed their upward momentum on Tuesday after selling off the previous week.

The notes gained 2 points outright with stock up 1%.

The notes traded up to a 106-handle and were wrapped around 106.625 heading into the market close, according to a market source.

Cytokinetics’ stock traded to a low of $38.88 and a high of $41.14 before closing the day at $39.47, an increase of 1.02%.

The convertible notes spiked during their early days in the secondary space before topping out at 113 in early July.

However, the notes have been on a strong downtrend alongside stock over the past two weeks and closed last Friday just shy of 104.

Cytokinetics priced a $540 million issue of the 3.5% convertible notes at par on June 30. It was the last deal to clear the primary market, which has been dormant throughout July.

The late-stage biopharmaceutical company with two heart drugs up for FDA approval is set to report earnings next week.

Ormat’s new heights

Ormat’s 2.5% convertible notes due 2027, one of the last deals to clear the primary market, hit a new outright high during Tuesday’s session.

The 2.5% convertible notes gained 1.5 points outright with stock up about 1%.

The notes were trading at 111.5 versus a stock price of $82.46, according to a market source.

They remained on a 111-handle heading into the market close.

Ormat’s stock traded to a high of $83.18 and a low of $81.90 before closing the day at $82.56, an increase of 0.90%.

Ormat has been on a strong upward trend since the $431 million issue priced at par on June 22.

The geothermal company is scheduled to report earnings early next week.

Coinbase under pressure

Coinbase’s 0.5% convertible notes due 2026 were under pressure on Tuesday as stock sank double digits following news the SEC was investigating the crypto-currency exchange.

The 0.5% notes fell 3 points outright to a 59-handle.

They contracted 1 point dollar-neutral on the move down, a source said.

Coinbase’s stock traded to a high of $62.89 and a low of $52.63 before closing the day at $52.93, a decrease of 21.08%.

The company’s capital structure sank following news the SEC was investigating whether the company allowed its users to trade digital assets that should have been registered as securities.

Mentioned in this article:

Coinbase Global Inc. Nasdaq: COIN

Cytokinetics Inc. Nasdaq: CYTK

Ormat Technologies Inc. NYSE: ORA

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