Morning Commentary: Fastly convertible notes in focus, tank outright in early trading

By Abigail W. Adams

Portland, Me., May 6 – The convertibles secondary space remained under pressure on Thursday as the sell-off in the tech sector continued to drag equity benchmarks lower.

While equity benchmarks pared their losses as the session progressed, the Nasdaq composite was down almost 1% shortly after the opening bell.

The equities of several convertibles issuers were under pressure amid the sell-off.

Fastly Inc.’s 0% convertible notes due 2026 were in focus early Thursday with the notes dropping on an outright basis as the cloud computing company’s stock sank more than 20%.

The already struggling 0% notes were down about 9 points outright to 86.25 early in the session.

However, they were moving in line dollar-neutral on a 60% delta.

“No one made any money unless heavily hedged,” a source said.

Fastly’s stock traded down to $44.66, a decrease of 23.65%, shortly before 11 a.m. ET.

Stock tanked after the company reported earnings and announced the departure of the company’s chief financial officer.

Fastly reported a loss per share of 12 cents versus analyst expectations for a loss of 11 cents per share.

Revenue was $84.9 million versus analyst expectations for revenue of $84.3 million.

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