Convertibles mostly tag along as equities rebound; Southwest slips; Booking.com flat

By Rebecca Melvin

Concord, N.H., Oct. 5 – Convertibles were quiet and softer in the early going on Tuesday, lagging a reversal in stock trading early in the session. Later trading in convertibles picked up, but with moves that only reflected those of the underlying shares for the most part.

“Market players seemed hesitant to jump back in and start adding, so the recovery was more muted,” a market source told Prospect News at late morning.

Equities were rebounding from a big slide on Monday. Also in the broader markets, the high-yield market opened up 1/8 point. The 10-year Treasury yield gained notably to 1.53%, and West Texas Intermediate crude gained 1.98% to $79.18 per barrel.

The Dow Jones industrial average added 311.75 points, or 0.9%, to 34,314.67, the S&P 500 index closed up 45.26 points, or 1.1%, to 4,345.72 and the Nasdaq gained 178.35 points, or 1.3%, to 14,433.36.

Among names trading during a generally quiet morning was the new issue of SoFi Technologies Inc. It was fairly active and continued to hold the attention of secondary traders, the market source said.

SoFi Technologies priced five-year zero-coupon convertible notes with an 40% initial conversion premium last week. They were marked as high as 105 in several large trades on Monday before closing out at 103.5.

SoFi’s shares closed up 16 cents, or 1%, to $16.25 on the day.

Southwest Airlines Co., which was a name in focus on Monday, was quiet early Tuesday, but later in the session began trading. Intraday on Tuesday, Southwest’s 1.25% convertible due 2025 slipped back several points to about the 155.5 level after moving up to 158 on Monday amid a bullish analyst outlook.

Southwest’s shares ended the session at $54.47, which was down 59 cents, or 1%, on the day.

Booking Holdings Inc.’s convertible began trading in earnest after late morning.

The Booking 0.75% convertibles due 2025 traded last at 150.4 versus the equity that dipped into the close to end down $27.18, or 1.1% at $2,432.34.

The travel technology company saw its shares underperform its competitors Trip.com Group Ltd. and Expedia Inc. on Tuesday. Expedia’s 0% convertible notes due 2026 were not seen in trade.

The convertibles of Teladoc Health Inc. edged up more than a point to 101ish with the Teladoc’s shares gaining a comparable amount, ending the session up $1.93, or 1.6% to $124.32. However, the stock dropped back in after-hours action by $3.24, or 2.6%, to $121.08.

MercadoLibre Inc. saw its convertibles stand unchanged for much of the session before succumbing to trades that edged lower in line with the underlying shares of the online marketplace company, which is based in Buenos Aires. The convertibles changed hands about 3 points lower at about 360 compared to shares, which slipped $7.31, or 0.46%, to $1,585.44.

The bonds dropped 21 points on Monday to close at $363.877. MercadoLibre priced $880 million of the notes in 2018, and early this year, it repurchased $440 million, or half of the issue.

Mentioned in this article:

Booking Holdings Inc. Nasdaq: BKNG

MercadoLibre Inc. Nasdaq: MELI

SoFi Technologies Inc. Nasdaq: SOFI

Southwest Airlines Co. NYSE: LUV

Teladoc Health Inc. NYSE: TDOC

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