Affirm convertibles improve; Twitter notes top par; Pinduoduo, Sea give back gains

By Abigail W. Adams

Portland, Me., March 17 – The convertibles primary market remained dormant on Thursday with no issuers stepping forward despite the strong rally in equity markets which extended for a third consecutive session.

While Thursday marked another strong session with the tone in the secondary space continuing to improve, it has been a volatile week.

Potential issuers may be waiting for more stability in markets before stepping forward, a source said.

However, if the tone remains positive in the coming week, sources expect to see some new deal activity.

Meanwhile, equity indexes continued to add to their gains on Thursday with small cap and tech stocks again the outperformers.

The Dow Jones industrial average closed the day up 418 points, or 1.23%, the S&P 500 index closed up 1.23%, the Nasdaq Composite closed up 1.33% and the Russell 2000 index closed up 1.69%.

While the tone improved on Thursday, trading activity remained light.

There was $60 million in reported convertibles trading volume about one hour into the session and $500 million on the tape at the market close.

Affirm Holdings Inc.’s 0% convertible notes due 2026 were in focus as the notes traded off their lows.

Twitter Inc.’s 0.25% convertible notes due 2024 made large outright gains, topping par in active trading for the first time in two weeks.

However, Pinduoduo Inc.’s 0% convertible notes due 2025 and Sea Ltd.’s 0.25% convertible notes due 2026 gave back some of their gains as their equities pulled back after Wednesday’s rally.

Affirm in focus

Affirm’s 0% convertible notes due 2026 were the top traded issue in the secondary space on Thursday as the notes bounced off their lows.

The 0% notes were changing hands at 65.125 early in the session, according to a market source.

They continued to improve as the session progressed and were trading at 66 versus an equity price of $36.59 heading into the market close.

The yield on the notes dropped to 9.117%.

There was $17 million in reported volume.

The notes continued to see nominal improvement after trading down to an all-time low of 63 on Monday.

Affirm’s stock continued its upward momentum after also hitting its 52-week low on Monday.

Stock traded to a low of $32.69 and a high of $36.99 before closing the day at $36.75, an increase of 10.23%.

Twitter tops par

Twitter’s 0.25% convertible notes due 2024 were active on Thursday with the notes topping par for the first time in more than two weeks.

The 0.25% notes rose about 2 points outright with stock up more than 5%.

The notes were changing hands at 101.5 versus a stock price of $37.38 heading into the market close, according to a market source.

There was $10 million in reported volume.

Twitter’s stock traded to a low of $34.89 and a high of $37.71 before closing the day at $37.29, an increase of 5.43%.

The 0.25% convertible notes dropped below par in early March and have largely traded on a 99-handle until Thursday’s session.

ADRs pullback

The ADR space remained active on Thursday with several convertible notes of Asian-based companies giving back some of their gains as their equity pulled back from Wednesday’s rally.

Pinduoduo’s 0% convertible notes due 2025 were down slightly in high-volume activity.

The notes fell about 0.5 point outright.

They were changing hands at 86.625 versus an equity price of $38.94 heading into the market close, according to a market source.

There was $14 million in reported volume.

Pinduoduo’s ADS traded to a high of $41.07 and a low of $36.81 before closing the day at $39.37, a decrease of 7.63%.

The Shanghai-based e-commerce platform’s ADS saw their largest single-day gain on Wednesday as Beijing assuaged investors delisting and regulatory concerns.

However, the notes largely trade for their yield, which was 8.656% at market close.

Sea’s 0.25% convertible notes due 2026 were also down in active trading.

The 0.25% notes shaved off 1 point outright on a volatile day for the company’s ADS.

The 0.25% notes were changing hands at 78.5 versus an equity price of $112.88 heading into the market close.

The yield on the notes was 5.761%.

Sea’s ADS traded to a low of $105.36 and a high of $114.64 before closing the day at $114.23, an increase of 2.58%.

While Sea is a Singapore-based internet company, its ADS traded down and rallied in sympathy with China-based companies.

Mentioned in this article:

Affirm Holdings Inc. Nasdaq: AFRM

Pinduoduo Inc. Nasdaq: PDD

Sea Ltd. NYSE: SE

Twitter Inc. NYSE: TWTR

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