Pre-holiday trading slows; Welltower paper declines; Farfetch convertibles swing higher

By Cristal Cody

Tupelo, Miss., Dec. 20 – Secondary trading in the convertibles space slowed Wednesday but remained busy with more than $821 million of reported volume over the session.

Secondary supply was down from Tuesday’s levels of more than $830 million of activity but still up from around $701 million of trading over Monday’s session.

Investment-grade convertible paper was mostly under pressure and led secondary supply over the session as stocks slid and volatility jumped, according to market sources.

Welltower Inc.’s 2.75% convertible notes due 2028 (Baa1/BBB+) fell over 1.75 points by the close after declining nearly ¾ point in early trading.

Stock indices were all higher over the morning but ended the day all more than 1% lower.

The S&P 500 index closed down 1.47%, the Dow Jones industrial average dropped 1.27%, the Nasdaq slid 1.5% and the Russell 2000 index fell 1.89%.

The CBOE Volatility Index, or ‘Fear Factor index’, climbed 9.1% Wednesday to 13.67.

Elsewhere, Farfetch Ltd.’s 3.75% convertible notes due 2027 reversed early morning declines by the close Wednesday in heavy trading.

“Basically, the company’s just gone belly-up,” a source said. “There wasn’t much volume this morning.”

The notes were down 0.625 point as trading got underway but went out 0.125 point higher on nearly $19 million of supply.

Welltower softens

Welltower’s 2.75% convertible notes due 2028 (Baa1/BBB+) moved lower over the afternoon Wednesday after softening in early trading, a source said.

The notes declined over 1.75 points to just under 109.25 versus an equity price of $88.98 on $7.5 million of trading by the close.

The bonds had given back nearly ¾ point to a print of 110.31 versus an equity price of $90.02 on more than $5 million of trading an hour after the markets opened Wednesday.

On Monday, the company’s outlook was reportedly raised to overweight from neutral by JPMorgan Chase & Co.

Welltower’s common stock closed Wednesday down 1.95% to $88.53, near the low end of the day’s $88.50 to $90.34 trading range.

Shares hit a 52-week high of $93.42 on Dec. 14.

Fartech rebounds in afternoon

Farfetch’s 3.75% convertible notes due 2027 traded 0.125 point better on the day, going out Wednesday at 2.25 on $18.6 million of secondary action, a source reported.

About an hour into the session, the bonds had dropped 0.625 point to 1.5 on less than $1 million of volume.

Farfetch’s stock ended trading Friday before it was suspended at 64 cents. Shares had traded from 53 cents to $8.02 over the past 52 weeks.

The New York Stock Exchange announced Tuesday that it will proceed to delist the company’s class A ordinary shares after Farfetch’s 6-K regulatory filing on Monday that a subsidiary entered into agreements to obtain bridge financing and to facilitate a process to dispose of all of the company’s assets.

The company further disclosed that after the assets are sold, it expects that there will be no value remaining for the holders of its class A and B ordinary shares and the $300 million outstanding of its convertible senior notes.

Mentioned in this article:

Welltower Inc. NYSE: WELL

Farfetch Ltd. NYSE: FTCH

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