Convertibles secondary quiet; Affirm eyed, trades near recent high; Live Nation active

By Abigail W. Adams

Portland, Me., Feb. 13 – It was a sleepy start to the week in the convertibles secondary space with trading volume light and little price movement in the names that did trade.

Equity indexes were strong on Monday following last week’s volatility that saw selling pressure set in after a post-Fed surge in risk assets.

The Dow Jones industrial average closed Monday up 377 points, or 1.11%, the S&P 500 index closed up 1.14%, the Nasdaq Composite index closed up 1.48% and the Russell 2000 index closed up 1.16%.

While in positive territory, there did not seem to be a strong conviction in the market with players awaiting Tuesday’s release of the Consumer Price Index report to determine the future direction of the market, sources said.

There was $28 million in reported convertibles trading volume about one hour into the session and $263 million on the tape about one hour before the market close.

Affirm Holdings Inc.’s 0% convertible notes due 2026 were active with the notes eliminating their post-earnings losses and continuing to trade at their highest levels in almost one year.

Live Nation Entertainment, Inc.’s 3.125% convertible notes due 2029 were active with the notes moving higher alongside stock.

While volume in the name was light, Fastly Inc.’s 0% convertible notes due 2026 made large gains as stock surged double digits with an analyst upgrading the company’s stock heading into earnings.

Affirm in focus

Affirm’s 0% convertible notes due 2026 were in focus on a quiet day in the secondary space with the notes continuing to trade at their highest level in nearly a year.

The 0% notes remained on a 67-handle on Monday.

They were changing hands at 67.375 versus a stock price of $12.44 early in the session and climbed to 67.75 in the late afternoon, sources said.

The yield was about 10.625%.

There was $12 million in reported volume, making it the most actively traded issue during Monday’s session.

Affirm’s stock traded to a low of $11.98 and a high of $13.20 before closing at $12.70, an increase of 1.44%.

However, the notes are not equity sensitive with a conversion premium of more than 1,000%.

Affirm’s 0% notes dipped as low as 62 post-earnings on Feb. 9.

However, they quickly recovered their losses despite a more than 15% drop in stock.

The notes are mostly held by outright accounts and have long traded for their yield.

Market players also anticipate the company “may try to do something” with the notes, a source said.

Live Nation active

Live Nation’s 3.125% convertible notes due 2029 were active with the notes inching higher on a green day for stock.

The 3.125% notes were up about 0.375 point outright with stock up about 1%.

The convertibles were trading at 104.75 versus a stock price of $77.81 in the late afternoon.

There was $7 million in reported volume with the notes among the top traded issues of the session.

Live Nation’s stock traded to a low of $76.16 and a high of $77.88 before closing at $77, up 0.77%.

Fastly’s upgrade

While volume in the name was light, Fastly’s 0% convertible notes due 2026 were making gains on an outright basis as stock soared double digits on an analyst upgrade.

The 0% notes climbed 1.5 points outright.

They were seen at 79.25 in the late afternoon. The yield was 7.625%.

There was $3 million in reported volume.

Fastly’s stock traded to a low of $10.75 and a high of $13.08 before finishing at $12.60 for a 27.66% gain.

Stock soared after a BofA analyst upgraded the stock to buy from under-perform ahead of the company’s earnings report.

The stock target was also boosted to $16 from $10.50.

The upgrade comes ahead of the cloud computing services provider’s earnings report, which is slated for Feb. 15.

Fastly’s 0% notes are high premium and trade largely for their yield.

Mentioned in this article:

Affirm Holdings Inc. Nasdaq: AFRM

Fastly Inc. NYSE: FSLY

Live Nation Entertainment, Inc. NYSE: LYV

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