Splunk’s soon-to-mature convertible notes in focus; Enphase lower; Coinbase improves

By Abigail W. Adams

Portland, Me., Feb. 16 – The convertibles primary market remained dormant early Thursday with the week poised to close with no new dollar issuance.

The lack of a pipeline has many in the market scratching their heads with investor demand strong and rates comparatively cheap.

While earnings season blackouts were pointed to as the drag on issuance in January, sources had expected to see an uptick at this stage in earnings season.

However, the indecision regarding rates and recession may be keeping potential issuers at bay, a source said.

Meanwhile, activity in the secondary space dwindled on Thursday as the market zeroes in on a long weekend.

While quiet, the space remained firm with accounts continuing to put cash to work despite the overhang in broader markets.

Equity indexes saw another volatile session on Thursday following the latest batch of macro data, which pointed to sticky inflation.

Indexes launched the day deep in the red, pared their losses to turn mixed midway through the session, but returned to the red and closed near the session lows.

The Dow Jones industrial average closed Thursday down 431 points, or 1.26%, the S&P 500 index closed down 1.38%, the Nasdaq Composite index closed down 1.78% and the Russell 2000 index closed down 0.66%.

There was $76 million in reported convertibles trading volume about one hour into the session and $369 million on the tape about one hour before the session close.

Splunk Inc.’s convertible notes were active with the soon-to-mature 0.5% convertible notes due Sept. 15, 2023 the most heavily traded issue of the session.

Enphase Energy Inc.’s 0% convertible notes due 2028 were lower in active trade on a heavy day for stock.

Coinbase Global Inc.’s 0.5% convertible notes due 2026 continued to improve on Thursday with Bitcoin on a tear.

Splunk in focus

Splunk’s soon-to-mature 0.5% convertible notes due Sept. 15, 2023 saw heavy volume on Thursday although with little movement in price.

The 0.5% notes were wrapped around 99 throughout the session.

While their duration is short, the notes still have some optionality with a conversion premium of about 37%.

The notes still trade on hedge, although the delta is light due to the duration, a source said.

There was $11 million in reported volume.

Splunk’s 1.125% convertible notes due 2027 also saw some action on Thursday.

The notes were trading at 86.75 versus a stock price of $107.21 early in the session.

They traded up to 87 by the late afternoon.

There was $5 million in reported volume.

Splunk’s stock traded to a low of $106.22 and a high of $109.43 before closing at $107.09, a decrease of 2.31%.

Enphase lower

Enphase’s 0% convertible notes due 2028 were lower in active trade with stock under pressure on Thursday.

The 0% notes were off about 3 points outright with stock down almost 7%.

They were changing hands at 103 versus a stock price of $207.14 in the late afternoon.

The notes came in on a dollar-neutral basis on the move down, a source said.

There was $10 million in reported volume.

Enphase’s stock traded to a high of $217.12 and a low of $202.67 before closing at $202.80, down 6.92%.

Coinbase improves

Coinbase’s 0.5% convertible notes due 2026 continued to improve on Thursday with Bitcoin on a tear.

The notes traded up to 69 in the late afternoon with the yield about 12.25%.

There was $7 million in reported volume.

Coinbase’s stock wavered between positive and negative territory before closing deep in the red.

Stock traded to a high of $73.30 and a low of $63.91 before ending at $65.59, down 5.41%.

However, stock is up more than 12% on the week with Bitcoin surging over the past two sessions on the heels of regulatory proposals that were less stringent than anticipated.

Coinbase’s 0.5% convertible notes eliminated losses from last Friday when they dived to a 66-handle.

Mentioned in this article:

Coinbase Global Inc. Nasdaq: COIN

Enphase Energy Inc. Nasdaq: ENPH

Splunk Inc. Nasdaq: SPLK

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