BeautyHealth convertibles rebound outright; Fortive active; Luminar hits new heights

By Abigail W. Adams

Portland, Me., Dec. 23 – The convertibles secondary space was quiet on Thursday with many market players calling an early end to the holiday-shortened week.

However, the convertible notes of several issuers that have been under pressure in recent weeks saw substantial improvement as the Santa Claus rally in equities proved real.

Equity benchmarks extended their gains for the third straight session with more speculative areas of the market boosted.

The Dow Jones industrial average closed the day up 197 points, or 0.55%, the Nasdaq closed up 0.85%, the S&P 500 index closed up 0.62%, setting a new record close, and the Russell 2000 index closed up 0.89%.

There was $45 million in reported convertible bond trading volume about one hour into the session and $115 million in reported volume in the late afternoon.

While volume was weak, the secondary space was strong with several pressured convertible notes lifted.

“There’s been a real bid for them,” a source said of the convertible notes of growth-orientated companies.

Beauty Health Co.’s 1.25% convertible notes due 2026, a name that rarely sees heavy volume, was in focus on Thursday.

The notes were on the rebound after trading to their lowest outright level since pricing on Monday.

Fortive Corp.’s 0.875% convertible notes due Feb. 15, 2022 continued to see heavy volume as the notes approach their maturity.

While volume in the name was light, Luminar Technologies Inc.’s recently priced 1.25% convertible notes due 2026 continued their upward momentum alongside stock.

Beauty Health rebounds

BeautyHealth’s 1.25% convertible notes due 2026 continued to rebound in active trading on Thursday after hitting their lowest outright level since pricing earlier in the week.

The 1.25% convertible notes were changing hands at 102.25 versus an equity price of $22.48 early in the session.

They climbed to a 103-handle as the session progressed and stood poised to close the day at 103.375.

BeautyHealth’s stock traded to a low of $22.23 and a high of $23.41 before closing the day at $23.15, an increase of 0.87%.

The convertible notes have been volatile alongside the skin care company’s stock. The notes were trading on a 114-handle heading into December.

However, the notes sold off as the company’s stock plummeted about 28% over the course of the month.

The convertible notes hit their lowest outright level on Monday since pricing with the notes trading as low as 98.

BeautyHealth priced a $750 million issue of the 1.25% convertible notes at par in September.

Fortive’s maturity

Fortive’s 0.875% convertible notes due Feb. 15, 2022 were among the most actively traded names of the day as the notes approach their maturity.

The notes were trading at par with a yield of 0.796%.

The notes will be redeemed at par plus accrued interest on Feb. 15.

Luminar’s new heights

Luminar’s 1.25% convertible notes due 2026 continued their upward momentum on Thursday with the notes hitting new heights.

The 1.25% notes were trading at 107 in the mid-afternoon, a source said. They continued to climb into the close, trading as high as 108.625, their highest level since pricing in mid-December.

Luminar’s stock traded to a low of $16.57 and a high of $17.60 before closing the day at $17.44, an increase of 4.43%.

The convertible notes have gained about 7 points outright with stock up 12% over the past week.

The greenshoe on the notes, which was partially exercised last week, was recently exercised in full, lifting the total size of the issue to $625 million.

Mentioned in this article:

Beauty Health Co. Nasdaq: SKIN

Fortive Corp. NYSE: FTV

Luminar Technologies Inc. Nasdaq: LAZR

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