Convertibles secondary opens new year with decent volume; DISH at par; MicroStrategy up

By Abigail W. Adams

Portland, Me., Jan. 4 – The convertibles primary market was quiet on Monday with equities in the red as Covid-19 cases surge and Georgia prepares for Tuesday’s runoff election, which will decide which party controls the U.S. Senate.

While no deals were announced on Monday, the primary market is expected to resume activity in full force if equity markets hold.

Meanwhile, the convertibles secondary space rang in the new year with decent trading volume, although the activity was dispersed over a wide swath of names.

There was $75 million on the tape less than one hour into the session and $500 million in reported volume about one hour before the market close, sources said.

While equities opened 2021 in the red, MicroStrategy Inc.’s recently priced 0.75% convertible notes due 2025 rocketed higher on an outright basis alongside stock, which sources attributed to the Bitcoin rally.

DISH Network Corp.’s 0% convertible notes due 2025 also continued their rebound with the notes now hovering around par.

Uber Technologies Inc.’s 0% convertible notes due 2025 were also active although largely unchanged during Monday’s session.

MicroStrategy gains

MicroStrategy’s 0.75% convertible notes due 2025 were in focus on Monday with the notes rocketing higher alongside stock.

The 0.75% notes were up more than 8 points outright with stock up between 9% and 12% during Monday’s session.

The notes were changing hands at 136.625 versus a stock price of $422.70 in the late afternoon, according to a market source.

There was more than $12 million in reported volume.

MicroStrategy’s stock traded to a high of $444.39 and a low of $410.01 before closing the day at $425.22, an increase of 9.44%.

The 0.75% notes were one of the last offerings to price in 2020. The use of proceeds was to purchase Bitcoin, which sources noted as unusual.

However, since the notes priced on Dec. 8, Bitcoin has seen a massive rally.

While Bitcoin pulled back on Monday to $31,000, the cryptocurrency surpassed $34,000 for the first time on Jan. 3.

DISH at par

DISH’s 0% convertible notes due 2025 were hovering around par in active trading on Monday.

While the notes remained around par, they were down slightly dollar-neutral after last week’s rally.

One source saw them contracted about 0.25 point on swap.

There was more than $13 million of the bonds on the tape.

DISH’s stock traded to a high of $32.67 and a low of $31.42 before closing the day at $31.53, a decrease of 2.5%.

The 0% convertible notes topped par last week and expanded about 0.5 point dollar-neutral, a source said.

DISH’s convertible notes offering was the last deal to price in 2020 and also one of the largest.

DISH priced a $2 billion offering of the 0% convertible notes on Dec. 16.

The notes were under water on an outright and dollar-neutral basis during its initial days in the aftermarket.

However, the notes gained steam heading into the end of the year.

Uber active

Uber’s 0% convertible notes due 2025 were active although largely unchanged on Monday.

The notes were down about 1.25 points outright. However, they were largely moving with stock, a source said.

The notes were changing hands at 103.375 in the late afternoon versus an equity price of $50.58.

There was $12 million of the bonds on the tape.

Uber’s stock traded to a high of $52.32 and a low of $49.64 before closing the day at $51.14, an increase of 0.27%.

Uber’s 0% convertible notes were also among the last deals of 2020 with the ridesharing company pricing a $1.15 billion offering of the notes on Dec. 8.

Mentioned in this article:

DISH Network Corp. Nasdaq: DISH

MicroStrategy Inc. Nasdaq: MSTR

Uber Technologies Inc. NYSE: UBER

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