‘Crazy day’ in secondary amid equity volatility; Oak Street active; Arrival, Fisker drop

By Abigail W. Adams

Portland, Me., Jan. 24 – It was a wild ride in the convertibles secondary market on Monday as equities launched the day with outsized losses only to close with gains.

In a dramatic midday reversal, the S&P 500 index and Nasdaq Composite index went from a decline of about 3.8% to 4.8%, respectively, to positive territory.

The Dow Jones industrial average was down almost 1,000 points in the early afternoon. It closed the day up 99 points, or 0.29%.

The S&P 500 index closed the day up 0.28%, the Nasdaq Composite closed up 0.63% and the Russell 2000 index closed up 2.29%.

There was $130 million in reported convertible bonds trading volume about one hour into the session and $552 million on the tape about one hour before the market close.

“Crazy friggin day,” a market source said.

There was definite panic in the secondary market early in the session, and, despite the late-day strength in equities, the market closed the day with a heavy tone, the source said.

Oak Street Health Inc.’s 0% convertible notes due 2026 were the most actively traded notes during Monday’s session.

While the notes were lower on an outright basis, there remained good demand for the issue with buyers in the market, a source said.

Affirm Holdings Inc.’s 0% convertible notes due 2026 were also lower outright in active trading.

Arrival SA’s 3.5% convertible notes due 2026 led losses with the notes contracting as much as 5 points during Monday’s session.

Fisker Inc.’s 2.5% convertible notes due 2026 were also under pressure with the notes seeing large losses on an outright and dollar-neutral basis.

Oak Street in focus

Oak Street’s 0% convertible notes due 2026 were among the top traded issues of Monday’s session.

The 0% convertible notes were down about 2 points outright.

The notes were changing hands at 71.5 versus a stock price of $16.38 early in the session.

They continued to trade on a 71-handle throughout the session and closed the day at 71.75.

The yield on the notes was about 8.125%.

There was $15 million in reported volume.

While the notes were lower outright, there remained solid demand for the issue with buyers in the market, a source said.

The notes offered a large yield that is not distressed.

Oak Street’s stock traded to a low of $15.78 and a high of $18.39 before closing the day at $18.22, an increase of 4.23%.

Affirm lower

Affirm’s 0% convertible notes due 2026 continued to trade lower on an outright basis as stock approached its 52-week low in intraday activity.

The 0% convertible notes fell about 2 points outright to change hands at 75 with a yield of about 6%.

There was $14 million in reported volume.

Affirm’s stock traded to a low of $48.62 and a high of $58.89 before closing the day at $58.25, an increase of 1.08%.

Dollar-neutral drop

Despite the upturn in equities, Arrival’s 3.5% convertible notes due 2026 and Fisker’s 2.5% convertible notes due 2026 closed the day with large dollar-neutral losses.

Arrival was the largest loser of the day.

The 3.5% notes dropped about 10 points outright. They traded as low as 61 and closed the day at 64 bid, 67 offered.

The notes were down 5 points dollar-neutral on the day.

“That was a big owie,” a source said.

Arrival’s stock closed the day at $4.02, a decrease of 9.36%.

Fisker’s 2.5% convertible notes due 2026 were down more than 5 points with stock off more than 11% in intraday activity.

The notes were trading at 84.25 versus a stock price of $10.85 early in the session. The notes gained strength as stock bounced back and were trading at 87 into the close.

However, the notes contracted 2 points dollar-neutral.

Fisker’s stock traded to a low of $10.35 and a high of $11.98 before closing the day at $11.94, a decrease of 0.67%.

Mentioned in this article:

Affirm Holdings Inc. Nasdaq: AFRM

Arrival SA Nasdaq: ARVL

Fisker Inc. NYSE: FSR

Oak Street Health Inc. NYSE: OSH

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