Pinduoduo, Affirm convertibles improve outright; Bilibili active; JetBlue contracts

By Abigail W. Adams

Portland, Me., Dec. 6 – The convertibles primary market was dormant on Monday with the window for new deal activity diminishing.

While there was an active pipeline of deals expected in December, recent volatility has pushed some of the anticipated offerings into the new year.

Meanwhile, the secondary space was quiet but with an improved tone as equity benchmarks recovered from last week’s rout.

While still a laggard, the tech sector was an active participant in Monday’s rally with the Nasdaq Composite launching the day in negative territory but closing the day firmly in the green.

The Dow Jones industrial average closed the day up 647 points, or 1.87%, the S&P 500 index closed up 1.17%, the Nasdaq Composite closed up 0.93% and the Russell 2000 index finished up 2.17%.

China-based convertible notes remained active after last Friday’s “blood bath,” which was sparked by DiDi Global Inc.’s announcement that it would delist from the New York Stock Exchange.

Pinduoduo Inc.’s 0% convertible notes due 2025 improved on an outright basis in active trading.

However, Bilibili Inc.’s recently priced 0.5% convertible notes due 2026 were largely unchanged.

Affirm Holdings Inc.’s recently priced 0% convertible notes due 2026 improved outright in active trading as stock pared its losses.

The convertible notes of airlines were also active on Monday as their equity surged with concerns about Omicron Covid-19 variant lockdowns fading.

While JetBlue Airways Corp.’s 0.5% convertible notes due 2026 gained on an outright basis, they continued to contract on hedge.

The ADR space

China-based convertible notes remained active on Monday following the carnage in their equities last Friday.

“It was a blood bath,” a source said.

Pinduoduo’s 0% convertible notes due 2025 were among the most actively traded issues in the secondary space with the notes improving outright.

The 0% notes rose 1 point outright.

They were changing hands at 88.625 in the late afternoon, according to a market source.

There was $19 million in reported volume.

Pinduoduo’s American Depositary Shares traded to a low of $52 and a high of $56.16 before closing the day at $56.01, an increase of 2.88%.

While Pinduoduo’s equity improved on Monday, the 0% convertible notes have long been in busted territory and now mostly trade for their yield, sources said.

The yield on the 0% notes was 6.191% on Monday.

Bilibili’s recently priced 0.5% convertible notes were active although largely unchanged on Monday.

The 0.5% notes were changing hands at 88.375 versus an equity price of $54.37 early in the session.

The notes were changing hands at 88.5 versus an equity price of $55.48 in the late afternoon.

There was $10 million in reported volume.

The Shanghai-based video sharing website’s ADS brushed up against its 52-week low early in the session before rebounding.

The ADSs traded to a low of $52.09 and a high of $57.13 before closing the day at $57, an increase of 3.75%.

The 0.5% convertible notes, which priced at par on Nov. 18, have been on a downward spiral over the past week as delisting threats between the United States and China escalated.

The threats culminated last Friday in DiDi Global Inc.’s announcement that it was leaving the NYSE about six months after its blockbuster IPO.

Affirm gains outright

Affirm Holdings’ 0% convertible notes due 2026 were active and improving outright on another volatile day for the company’s stock.

Affirm’s 0% convertible notes traded down about 1 point outright with stock off early.

The convertible notes were changing hands at 92.5 versus a stock price of $102.51 early in the session.

However, the notes rose to trade at 94.625 versus an equity price of $113.26 in the late afternoon.

There was about $14 million in reported volume.

Affirm’s stock traded to a high of $114.96 and a low of $96.44 before closing the day at $110.95, an increase of 3.46%.

Airlines active

The convertible notes of airlines were active on Monday as concern over travel restrictions prompted by the Omicron Covid-19 variant faded.

Southwest Airlines Co.’s 1.25% convertibles due 2025 (Baa1/BBB) rose alongside stock in active trading.

The 1.25% convertible notes traded up to 139.25 in the late afternoon.

They were “bouncing around,” with stock and largely unchanged dollar-neutral, a source said.

There was about $14 million in reported volume.

Southwest’s stock traded to a high of $46.96 and a low of $44.99 before closing the day at $45.56, an increase of 2.89%.

JetBlue’s 0.5% convertible notes due 2026 rose outright as stock rebounded.

However, the notes continued to contract dollar-neutral.

The 0.5% convertible notes gained about 1.25 points outright.

They were changing hands at 95.5 versus a stock price of $14.56 in the late afternoon.

However, the notes were contracted another 0.25 point, a source said.

There was about $8 million in reported volume.

JetBlue’s stock traded to a high of $14.68 and a low of $13.84 before closing the day at $14.27, an increase of 4.93%.

The 0.5% convertible notes have contracted about 1.25 points over the past two weeks, a source said.

The notes were overvalued to begin with and saw a large outright seller in the market as travel names took a hit on Omicron news, the source said.

Mentioned in this article:

Affirm Holdings Inc. Nasdaq: AFRM

Bilibili Inc. Nasdaq: BILI

JetBlue Airways Corp. Nasdaq: JBLU

Pinduoduo Inc. Nasdaq: PDD

Southwest Airlines Co. NYSE: LUV

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.