Morning Commentary: Fastly convertibles in focus in early trading, drop post-earnings

By Abigail W. Adams

Portland, Me., Feb. 17 – It was a quiet morning in the convertibles secondary space as mounting tensions over the Ukrainian situation again drove equity indexes into negative territory.

The Dow Jones industrial average was down 465 points, or 1.33%, the S&P 500 index was down 1.42%, the Nasdaq Composite was down 1.73% and the Russell 2000 index was down 1.68% shortly before 11 a.m. ET.

There was $90 million in reported volume about one hour into the session with earnings-related volatility continuing to drive trading activity.

Fastly Inc.’s 0% convertible notes due 2026 were the name of the day on Thursday as stock tanked double-digits following earnings.

While the 0% notes were down outright, they were holding up well near their bond floor given the move in stock, a source said.

The 0% notes were down about 3 points outright as stock tanked about 30%.

They were changing hands at 75.875 versus a stock price of $20.17 early in the session.

There was $11 million in reported volume.

Fastly’s stock was trading at $20.24, a decrease of 30.04%, shortly before 11 a.m. ET.

The 0% notes have been long been busted, a source said.

While Fastly beat expectations on both the top and bottom lines, stock plunged on weak guidance.

The cloud computing service provider reported a loss per share of 10 cents versus the 16 cents expected.

Revenue was $92.48 million versus the 97.72 million expected.

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