Coinbase convertibles crumble with Bitcoin; Amyris yield cracks 38%; Affirm pressured

By Abigail W. Adams

Portland, Me., Nov. 9 – The convertibles primary market remained dormant on Wednesday with prospects for new issuance before the week comes to a close low.

There are whispers of deals in the pipeline; however, earnings and fragile markets have prevented potential issuers from coming to the market.

There were little signs that markets were stabilizing on Wednesday with equity indexes deep in the red as Bitcoin continued to plummet, control of the U.S. Congress remained uncertain and the market braced for October’s Consumer Price Index report set for release on Thursday.

The Dow Jones industrial average closed Wednesday down 647 points, or 1.95%, the S&P 500 index closed down 2.08%, the Nasdaq Composite index closed down 2.48% and the Russell 2000 index closed down 2.68%.

Trading activity in the secondary space remained subdued with $466 million in reported volume heading into the market close, albeit with one exception.

Coinbase Global Inc.’s 0.5% convertible notes due 2026 accounted for the lion’s share of activity on Tuesday with the notes in freefall as the sudden demise of crypto-exchange FTX cast doubt over Coinbase’s future.

However, Amyris Inc.’s 1.5% convertible notes due 2026 were the largest losers of Wednesday’s session with the notes down double digits after a large earnings miss.

Affirm Holdings Inc.’s 0% convertible notes due 2026 also fell in active trade as stock plummeted post earnings.

Coinbase crumbles

Coinbase’s 0.5% convertible notes due 2026 were in freefall on Wednesday as Bitcoin continued to plummet following the sudden and dramatic demise of former crypto powerhouse FTX.

The 0.5% convertible notes sank 7 points outright and saw a large dollar-neutral contraction as investors fled the crypto space.

The notes were changing hands at 57.875 versus a stock price of $46.04 in the late afternoon.

While the notes have an enormous premium, they are still played on a light hedge and saw a large contraction on the move down, sources said.

There was $52 million in reported volume with the notes seeing more than 3x the volume of the next most active name in the space.

Coinbase’s stock traded to a high of $49.69 and a low of $44.62 before closing the day at $45.98, a decrease of 9.54%.

Bitcoin continued to plummet with the digital currency hitting a new 52-week low of $16,074.49, a decrease of 12.37%, shortly after the close of U.S. equity markets.

Turmoil continued in the crypto world with Binance announcing that it was walking away from FTX less than 24 hours after announcing the acquisition.

FTX was once a powerhouse in the crypto world. Investors have been fleeing the crypto-space since its sudden and violent demise, which has cast doubt over Coinbase’s future, sources said.

Amyris tanks

Amyris’ 1.5% convertible notes due 2026 sank double digits in heavy volume on Wednesday as investors questioned the biotechnology company’s future viability after a large earnings miss.

The 1.5% convertible notes fell 20 points outright with stock down more than 40%.

The notes traded as low as 25 early in the session but pared some losses and were wrapped around 27.75 heading into the market close.

The yield on the notes was north of 38%, according to a market source.

There was $13 million in reported volume.

Amyris’ stock traded to a low of $1.44 and a high of $1.82 before closing the day at $1.52, a decrease of 41.51%.

Stock tanked after the company reported losses per share of 44 cents versus analyst expectations for losses of 14 cents in the third quarter.

Revenue was $71.13 million versus analyst expectations for revenue of $91.18 million.

Affirm’s earnings

Affirm’s 0% convertible notes due 2026 were also under pressure after earnings with the notes sinking 3 points outright as stock plunged more than 20%.

The notes traded down to a 59-handle.

They were seen changing hands at 59.5 versus a stock price of $12.12 in the late afternoon.

The yield on the notes was 13.375%.

The high-premium notes “are pretty much just pure bond now,” a source said.

However, some may still play the name on hedge.

There was $12 million in reported volume.

Affirm’s stock traded to a high of $13.75 and a low of $11.94 before closing the day at $12.10, a decrease of 22.63%.

The buy-now pay-later company beat analyst expectations with fiscal first-quarter losses per share of 86 cents versus analyst expectations for losses of 88 cents and revenue of $361.62 million versus analyst expectations for revenue of $360.47 million.

However, Affirm slashed its forward guidance with the company now expecting $400 million to $420 million in revenue in the fiscal second quarter versus the $434 million analysts had expected.

Mentioned in this article:

Affirm Holdings Inc. Nasdaq: AFRM

Amyris Inc. Nasdaq: AMRS

Coinbase Global Inc. Nasdaq: COIN

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