Morning Commentary: Coinbase convertibles rebound; Affirm gains; Twitter notes fall

By Abigail W. Adams

Portland, Me., May 13 – It was an active morning in the convertibles secondary space with equity markets poised to close a brutal week on strong footing.

Equity indexes were firmly in the green early in Friday’s session with few signs of selling pressure to drag them down.

“They might actually hold this time,” a source said.

The Dow Jones industrial average was up 468 points, or 1.48%, the S&P 500 index was up 2.21%, the Nasdaq Composite index was up 3.39% and the Russell 2000 index was up 3.27% shortly before 11 a.m. ET.

There was $124 million in reported volume about one hour into the session with several badly battered convertible notes bouncing off their lows.

Coinbase Global Inc.’s 0.5% convertible notes due 2026 staged a rebound alongside the crypto-currency exchange’s stock as Bitcoin again broke $30,000 after a flash crash the previous session.

Affirm Holdings Inc.’s 0% convertible notes due 2026 were also on the rise after a surprise earnings beat with stock up double digits following earnings, in contrast to the recent trend.

While several names were on the rebound early Friday, Twitter Inc.’s convertible notes were down after Elon Musk announced his takeover offer was on hold.

Coinbase gains

Coinbase’s 0.5% convertible notes due 2026 continued to dominate activity in the secondary space with the notes recouping some of their losses from the previous two sessions.

Coinbase’s convertible notes were up almost 6 points outright with stock up almost 19%.

The notes were changing hands just shy of 64 versus a stock price of $68.11 early in the session.

There was $12 million in reported volume.

Coinbase’s stock was changing hands at $69.55, an increase of 18.91%, shortly before 11 a.m. ET.

The notes dropped more than 11 points outright over the past two session following a large earnings miss and the flash crash of Bitcoin.

Affirm’s earnings

Affirm broke the trend of convertible issuers that saw their stock drop double digits following earnings with the buy-now, pay-later firm jumping double digits after a surprise earnings beat.

The results lifted Affirm’s long-busted 0% convertible notes due 2026.

The 0% notes rose 2.75 points outright to return to a 60-handle on Friday.

There was $8 million in reported volume.

The notes were changing hands just north of 60.25 versus a stock price of $23.59 early in the session.

Affirm’s stock traded at $21.83, an increase of 20.79%, shortly before 11 a.m. ET.

Affirm’s shares jumped after a surprise earnings beat with the company reported losses per share of 19 cents versus analyst expectations for losses per share of 39 cents.

Revenue was $354.76 million versus analyst expectations for revenue of $344.01 million.

Twitter down

While it was a green day for risk assets, Twitter was in the red after Musk announced his takeover deal was on hold.

“Surprise, surprise,” a source said.

Twitter’s 0% convertible notes due 2026 fell 2.625 points outright to trade at 89.25.

The 0.25% convertible notes due 2024 fell 4 points outright to return to a par-handle.

The 0.25% convertible notes were changing hands at 100.375 versus a stock price of $39.96 early in the session.

Twitter’s stock was trading at $41.20, a decrease of 8.62%, shortly before 11 a.m. ET.

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