Morning Commentary: Convertibles secondary trading quiet at open; Affirm holds gains

By Abigail W. Adams

Portland, Me., Feb. 13 – It was a sleepy start to the week in the convertibles secondary space with few names on the tape and little price movement in the names that did trade.

Equity indexes returned to the green on Monday following a rocky week with selling pressure setting in after a post-Fed surge in risk assets.

The Dow Jones industrial average was up 235 points, or 0.69%, the S&P 500 index was up 0.61%, the Nasdaq Composite index was up 0.73% and the Russell 2000 index was up 0.30% shortly before 11 a.m. ET.

While in positive territory, there did not seem to be a strong conviction in the market with players awaiting Tuesday’s release of the Consumer Price Index report to determine the future direction of the market, sources said.

There was $28 million in reported volume about one hour into the session with no name seeing more than $5 million in reported volume.

Affirm Holdings Inc.’s 0% convertible notes due 2026 were active with the notes eliminating their post-earnings losses and continuing to trade at their highest levels in almost one year.

The 0% notes remained on a 67-handle early Monday and were changing hands at 67.375 versus a stock price of $12.44 early in the session, according to a market source.

The yield was about 10.875%.

There was $3 million in reported volume, making it among the most actively traded issues in the secondary space.

Affirm’s stock was seen at $12.78, an increase of 2.64%, shortly before 11 a.m. ET.

Affirm’s 0% notes dipped as low as 62 post-earnings on Feb. 9.

However, they quickly recovered their losses despite a more than 15% drop in stock with the notes largely trading for their yield.

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