Morning Commentary: Affirm convertible notes active early in otherwise quiet morning

By Abigail W. Adams

Portland, Me., April 12 – It was another quiet morning in the convertibles secondary space on Tuesday as equities rallied strongly as Treasuries broke their rout on the heels of the latest consumer price index report.

The report reflected the largest increase in consumer prices since 1981 with the index rising to 8.5% in March and a 1.2% month-over-month increase.

While the report came in greater than expectations for an increase to 8.4%, the core price index report, excluding food and energy, came in with just a 0.3% month-over-month increase, the smallest increase in the last five months.

The Dow Jones industrial average was up 179 points, or 0.51%, the S&P 500 index was up 0.59%, the Nasdaq Composite index was up 0.84%, and the Russell 2000 index was up 1.71% shortly before 11 a.m. ET.

“The market’s looking for any excuse to rally,” a source said.

While equity markets were strong on Tuesday, the convertibles secondary space remained quiet with $59 million in reported volume a little more than one hour into the session.

Affirm Holdings Inc.’s 0% convertible notes due 2026 were active on an otherwise quiet morning with the notes offering a hefty yield.

The 0% convertible notes were up about 0.5 point outright early in the session.

They were changing hands just shy of 69.5 shortly before 11 a.m. ET.

The notes were yielding about 8.125%.

There was $6 million in reported volume.

Affirm’s stock was changing hands at $38.74, an increase of 2.77%, shortly before 11 a.m. ET.

However, the notes largely trade for their yield.

“With rates moving up, people are definitely looking for higher yields,” a source said.

Affirm has also been the subject of takeover speculation although sources were skeptical about the rumors.

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