Coinbase volatile; Vroom, Bentley Systems drop outright; Western Digital converts active

By Abigail W. Adams

Portland, Me., July 14 – The convertible secondary space continued to see an uptick of activity on Wednesday as volatility returned to equity markets with inflation concerns once again pressuring growth stocks.

While the major equity benchmarks remained in positive territory for the majority of the session, a round of selling activity pushed the Nasdaq Composite into negative territory by the market close.

The Dow Jones industrial average closed the day up 44 points or 0.13%, the S&P 500 index closed the day up 0.12% and the Nasdaq Composite closed the day down 0.22%.

There was about $100 million in reported volume one hour into the session and $513 million in reported volume heading into the market close.

Coinbase Global Inc.’s 0.5% convertible notes due 2026 were in focus on a volatile day for the stock.

While the convertible notes initially posted gains on an outright basis early in the session, they closed the day below their discounted issue price as stock nosedived.

However, the notes improved on a dollar-neutral basis.

Vroom Inc.’s 0.75% convertible notes due 2026 and Bentley Systems Inc.’s 0.375% convertible notes due 2027, two of the most recent deals to clear the primary market, were also down on an outright basis in active trading.

Western Digital Corp.’s 1.5% convertible notes due 2024 were the most actively traded issue in the secondary space although with little movement in price.

Coinbase volatile

It was another volatile day for Coinbase’s 0.5% convertible notes due 2026 with the notes posting gains alongside stock early in the session but nosediving as stock sold off heading into the afternoon.

While the 0.5% notes closed the day below their discounted issue price, they improved on a dollar-neutral basis on the move down.

The 0.5% notes were up about 0.375 point outright to trade at 101 versus a stock price of $246 early in the session.

However, Coinbase’s stock succumbed to selling pressure as the session progressed.

The 0.5% notes sank more than 2 points outright in the afternoon with stock down more than 5%.

The notes, which priced at 99, were changing hands at 98.875 versus a stock price of $232.10 in the late afternoon.

They expanded about 0.5 point on a dollar-neutral basis on the move down, a source said.

There was more than $21 million in reported volume.

Coinbase stock traded to a high of $247.45 and a low of $229.16 before closing the day at $229.94, a decrease of 5.5%.

Coinbase stock was under pressure alongside several other growth stocks.

While Federal Reserve Chair Jerome Powell reaffirmed his stance that inflation was transitory, Tuesday’s consumer price index report and rising bond yields were once again pressuring the highfliers in the tech sector.

Coinbase also faces increased competition with FTX founder Sam Bankman-Fried publicly stating his ambitions for FTX to overtake Coinbase and Binance as the largest crypto trading platform in the world.

Down outright

Vroom’s 0.75% convertible notes due 2026 and Bentley Systems’ 0.375% convertible notes due 2027, two of the most recent deals to clear the primary market, were trading off on an outright basis as stock dropped.

Vroom’s 0.75% convertible notes dropped about 2 points outright to trade down to a 101-handle.

They were marked at 101.25 versus a stock price of $40.21 in the late afternoon, according to a market source.

There was more than $11 million in reported volume.

Vroom’s stock traded to a high of $41.96 and a low of $39.94 before closing the day at $40.14, a decrease of 3.04%.

Vroom priced a $625 million issue of the 0.75% notes on June 15.

Bentley Systems’ 0.375% convertible notes due 2027 were also trending lower on an outright basis in active trading.

The 0.375% notes dropped 1.5 points outright with stock off more than 3%.

The notes were changing hands at 100.75 versus a stock price of $61.82 in the late afternoon.

There was more than $10.5 million on the tape.

Bentley Systems’ stock traded to a high of $64.08 and a low of $61.39 before closing the day at $61.52, a decrease of 3.15%.

Bentley Systems priced a $575 million issue of the 0.375% notes at par on June 23 – it was the last deal to clear the primary market.

Western Digital active

Western Digital’s 1.5% convertible notes due 2024 were the most actively traded issue in the secondary space although with little movement in price.

The 1.5% convertible notes continued to trade around 106.

There was more than $27 million in reported volume.

Western Digital stock traded to a high of $72.15 and a low of $69.62 before closing the day at $70.01, a decrease of 0.1%.

The hard disk drive manufacturer announced the date of its fourth-quarter earnings release on Tuesday, which will be post-close Aug. 4.

Mentioned in this article:

Bentley Systems Inc. Nasdaq: BSY

Coinbase Global Inc. Nasdaq: COIN

Vroom Inc. Nasdaq: VRM

Western Digital Corp. Nasdaq: WDC

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