Twitter rules the convertible bond tape; Ford positive on fallback day for equities

Chicago, Oct. 5 – The market grew increasingly confident about the buyout deal for Twitter Inc. at $54.20 per share, and the company’s 0.25% convertible bonds due 2024 were heavily in play throughout the day on Wednesday, at their new price by the close: a 109-handle.

The fresh price for the bonds was last seen soon after the takeover deal was announced, back in April.

The company’s common shares ended the day slightly off their 4 p.m. ET price on Tuesday, settling at $51.30 for the day and off just a tad more in after-hours trading.

However, the stock price has jumped 19.55% from where it sat a mere five days ago before news broke that Elon Musk’s deal was back on.

With all the energy for Twitter, the most active issue in the convertibles secondary space over the past couple of months took a back burner.

Southwest Airlines Co.’s 1.25% convertibles due in 2025, never stagnant, were trading at approximately 117.5 in the larger trades of the day, slightly relaxed from higher prices on Tuesday that had them at 119.5.

Southwest’s stock was down a marginal bit more than the overall equity markets, negative 0.6%, or at $32.99 per share at the close.

Singapore’s Sea Ltd., the tech conglomerate, saw its 2.375% convertible bonds due 2025 back on the tape in action that had them better by around 3 points in Wednesday trading, marked at 103.5 late in the day.

The bonds remain lower than a year ago, however, when they were trading at 403.62 at their peak.

The bonds have followed the stock, which is down 80.81% year over year. It was down 0.31% in the Wednesday market, closing at $60.50.

However, the bonds priced in May 2020 before the stock price quadrupled roughly one year later. The stock price was $68.27 when the bonds priced, with a 32.5% initial conversion premium.

The bonds have call protection until May 2023.

Enthusiasm for Ford Motor Co.’s good news regarding electric vehicle sales has not waned.

Ford’s zero-coupon bonds due March 15, 2026 were still changing hands on Wednesday, ticking up to around 97.5.

It’s a reclamation of where the bonds were trading around two weeks ago but not as high as they were before the automaker announced parts shortages in mid-September that were impacting sales.

Ford’s latest convertible bond priced in March 2021 against a stock price of $12.49 and an initial conversion premium of 40%.

The company’s stock traded up 1.17% to $12.51 on Wednesday.

Airbnb Inc. is enjoying the optimistic approach to travel demand that is buoying the company’s stock and lifting the bonds 2 points to 84.75 versus where they were a week ago.

The $2 billion bond issue priced in March 2021 with a stock price of $180.40 and a conversion premium of 60%.

An outlier on Wednesday, the company’s stock rose 0.86% in trading on Wednesday to end the day at $111.76.

The primary market was still dormant as issuers assess whether the rally in equities will last long enough to get a deal done.

Mentioned in this article:

Airbnb Inc. Nasdaq: ABNB

Ford Motor Co. NYSE: F

Sea Ltd. NYSE: SE

Southwest Airlines Co. NYSE: LUV

Twitter Inc. NYSE: TWTR

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