MicroStrategy convertible notes volatile outright, hold on hedge; Cardlytics gains

By Abigail W. Adams

Portland, Me., March 18 – It was a quiet start to the week in the convertibles primary market with no new deals launching.

There may be some primary market activity in the next few sessions, sources said.

However, no deluge is expected with markets laser focused on the Fed as the Federal Open Market Committee convenes on Tuesday.

Meanwhile, it was an equally quiet start to the week in the convertibles secondary space with equity indexes mixed.

While AI momentum reignited a surge in the tech-heavy Nasdaq, the rate-sensitive small cap Russell 2000 index remained in negative territory.

The Dow Jones industrial average closed Monday up 76 points, or 0.20%, the S&P 500 index closed up 0.63%, the Nasdaq Composite index closed up 0.82% and the Russell 2000 index closed down 0.72%.

There was $483 million on the tape in the late afternoon with MicroStrategy Inc.’s convertible notes dominating activity as stock cracked.

While MicroStrategy’s latest 0.875% convertible notes due 2031 sank well below par with stock off more than 10% in intraday activity, they held up on hedge with the notes maintaining their large dollar-neutral expansion.

Global Payments Inc.’s 1.5% convertible notes due 2031 (Baa3/BBB-) remained a top trader in the space with the notes continuing to improve.

Cardlytics Inc.’s 1% convertible notes due 2025 continued their upward momentum with the notes making blockbuster gains over the past two sessions.

MicroStrategy volatile

MicroStrategy’s convertible notes dominated activity in the secondary space with the notes volatile alongside stock.

MicroStrategy’s newest 0.875% convertible notes due 2031 saw large price swings on an outright basis. The notes traded as high as 104 pre-open but sank back to a par-handle and were trading at 100.625 early in the session.

The notes continued their downtrend to trade as low as 95 in intraday activity.

The notes pared losses and were trading at 97.5 in intraday activity.

“They’ve been all over the place,” a source said.

However, the notes were holding on hedge and were largely unchanged dollar-neutral.

MicroStrategy’s 0.625% convertible notes due 2030 sank 14 points outright to trade at 124.75 in the late afternoon.

The 0% convertible notes due 2027 were down 12 points outright to trade at 129.75.

All tranches were moving in line dollar-neutral, a source said.

MicroStrategy’s stock traded to a low of $1,445.01 and a high of $1,734.90 before closing at $1,502.76, a decrease of 15.69%.

MicroStrategy’s 0.875% convertible notes were volatile on an outright basis on their aftermarket debut last Friday.

While the notes held above par as stock sank early in the session on Friday, they traded as high as 105 heading into the close as MicroStrategy’s stock popped to set a new 52-week high.

While volatile outright, the notes performed well on hedge and expanded about 1.5 to 2 points dollar-neutral.

Global Payments active

Global Payments’ 1.5% convertible notes due 2031 continued to trade en masse on Monday with the notes again improved in heavy volume.

The notes were trading at 105 in the late afternoon.

They expanded about 0.25 point dollar-neutral, a source said.

There was $35 million in reported volume.

Global Payments’ stock traded to a low of $129.26 and a high of $131.12 before closing at $130.55, an increase of 0.52%.

Global Payments’ 1.5% convertible notes have been stalwarts on Trace since the $2 billion issue priced at par in late February.

While the notes’ recent addition to the indexes was partly responsible for the heavy volume in the name, the issue is also large, liquid and investment grade from a sector outside of energy or utilities.

Cardlytics gains continue

Cardlytics’ 1% convertible notes due 2025 continued to shoot higher in active trade on Monday after the blockbuster gains of last Friday’s session.

The 1% notes jumped another 3 points outright despite a red day for the company’s stock.

They traded up to 86.5 in the late afternoon.

The notes have expanded 7 points dollar-neutral over the past two sessions, a source said.

Cardlytics’ stock traded to a low of $12.71 and a high of $14.64 before closing at $13.06, down 9.93%.

Cardlytics’ 1% convertible notes jumped 15 points outright last Friday and expanded several points dollar-neutral as stock shot up 77% after earnings.

Mentioned in this article:

Cardlytics Inc. Nasdaq: CDLX

Global Payments Inc. NYSE: GPN

MicroStrategy Inc. Nasdaq: MSTR

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