Convertibles trading volatile; DigitalOcean down; Affirm active; Opendoor contracts

By Abigail W. Adams

Portland, Me., Nov. 23 – It was an active day in the convertibles secondary space as volatility returned to equities with the tech sector wavering between an acceleration of Monday’s sell-off and a rebound.

Equity markets closed mixed as a spurt of buying activity into the close pared losses from earlier in the session.

The Dow Jones industrial average closed the day up 194 points, or 0.55%.

While down as much as 0.63% early in the session, the S&P 500 index closed the day with a 0.17% gain.

The Nasdaq Composite was down as much as 1.48% shortly before 11 a.m. ET; however, dip buying into the close lifted the index, which closed down 0.5%.

The overall market was heavy amid the volatile market conditions. “In general, things have been under pressure dollar-neutral,” a source said.

There were still plenty of buyers in the market. However, bids were coming in low with the sentiment that sellers will come to the buyer, the source said.

There was $112 million in reported convertibles secondary trading volume about one hour into the session and $650 million on the tape about one hour before the market close.

Affirm Holdings Inc.’s 0% convertible notes due 2026 remained active with the notes improving outright on a volatile day for the company’s stock.

However, DigitalOcean Inc.’s 0% convertibles due 2026 remained under pressure as stock extended its double-digit losses from the previous session.

Opendoor Technologies Inc.’s 0.25% convertible notes due 2026 were once again active with the notes tanking outright and contracting dollar-neutral as stock continued to get pummeled.

Affirm in focus

Affirm’s 0% convertible notes due 2026 remained active on Tuesday with the notes improving outright as stock regained some ground following Monday’s sell-off.

Affirm’s 0% convertible notes were up about 0.5 point outright with stock gaining as much as 3% by the market close.

The notes were changing hands at 98.75 versus a stock price of $125.49 early in the session, according to a market source.

They continued to trade around 98.75 in the late afternoon.

There was more than $18 million in reported volume.

Affirm’s stock traded to a high of $129.63 shortly after the opening bell before sinking to an intraday low of $120.05.

However, stock rebounded as the session progressed and closed the day at $127.61, an increase of 3.32%.

Affirm’s stock has been under pressure since the buy now, pay later company priced the 0% convertible notes at par on Nov. 18.

The greenshoe was recently exercised in full lifting the overall size of the deal to $1.75 billion.

DigitalOcean down again

DigitalOcean’s 0% convertible notes due 2026 continued to drop on an outright basis as stock extended its losses.

The 0% notes were trading at 97.25 versus a stock price of $102.97 early in the session, according to a market source.

The convertibles fell to 95.375 in the late afternoon as stock gave back its gains and again sank into negative territory.

There was about $12 million in reported volume.

DigitalOcean’s stock traded to a high of $104.86 shortly after the opening bell. However, stock quickly traded down to a low of $94.77 as broader equity markets turned negative.

Stock closed the day at $98.96, a decrease of 3.58%.

DigitalOcean’s stock sank almost 20% on Monday as high-flying tech stocks got pummeled amid a rising 10-year Treasury yield.

Opendoor active

Opendoor’s 0.25% convertible notes due 2026 dropped double-digits on Tuesday with stock hard hit by the sell-off in the tech sector.

However, the notes expanded dollar-neutral on the move down.

The 0.25% notes sank 13 points outright with stock off almost 9%.

The notes were changing hands at 109.375 versus a stock price of $16.35 in the late afternoon.

The notes contracted about 0.5 point dollar-neutral, a source said.

There was $14 million in reported volume.

Opendoor’s stock traded to a high of $18.32 and a low of $16.28 before closing the day at $16.71, a decrease of 8.94%.

Opendoor’s stock “was the poster child of getting whacked,” a source said.

Stock had been on a tear since the online real estate company priced a $977.5 million issue of the 0.25% convertible notes at par in mid-August with a stock reference price of $14.795.

Stock traded as high as $25 in October and the convertible notes traded as high as 142.

However, the stock has dropped more than 30% over the past month.

Mentioned in this article:

Affirm Holdings Inc. Nasdaq: AFRM

DigitalOcean Inc. NYSE: DOCN

Opendoor Technologies Inc. Nasdaq: OPEN

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.