SoFi Technologies convertibles hit 105 then come in; Pacira aches; Southwest lifts

Chicago, Oct. 4 – On the third market day in the secondary space, SoFi Technologies Inc. continued to hold the attention of secondary traders, maintaining a hearty premium early in the session and then retracting a touch late in the day.

Pacira BioSciences Inc. had a slight uptick in trading volume as the company’s convertible bonds that priced in July hit a fresh low on news that there might be a competing generic for its central pharma offering, an income-generating non-opioid pain relief drug.

Southwest Airlines Co. remained in focus throughout Monday, bolstered by a bullish analyst outlook, even in the face of generally rising oil prices and a down day in the equities markets.

SoFi touches 105

SoFi Technologies’ recently priced five-year zero-coupon convertible notes with an initial 40% conversion premium sang a high note before noon ET on Monday when the bonds were marked at 105 in several large trades.

They closed out Friday just under that range after dominating the tape in extremely active trading on Thursday.

Ultimately, the new bonds closed out Monday at 103.5.

The stock absorbed the hit of the new convertibles and general equity rockiness and was off another 2.19% on Monday. Closing at $16.09, the stock lost 36 cents on the day and was down 7.48% on the week.

While the trajectory has not been smooth for the online personal finance company, year to date the stock is still up 31.89%.

The $1.2 billion convertibles issue, with the greenshoe now exercised, is the first major debt issue for the company that was founded in August 2011.

Competitor Upstart Holdings Inc. similarly priced its first major debt issue in mid-August, a comparatively diminutive $661.25 million of 0.25% five-year convertible bonds with a relatable 42.5% initial conversion premium.

The stock took a brief hit initially for the offering, moving from $212.27 on Aug. 18 to a low of $195.64 on Aug. 20, before starting a reasonably steady ascent that has recently tapered – ending Monday at $289.77.

The bonds, which priced in August, have thus far peaked at 143.42 on Sept. 23 and closed Monday at 131.3 with steady, but quiet, trading over the past week.

Generic threat

Pacira Biosciences found itself with a threat to its main business line as eVenus Pharmaceutical Laboratories filed for approval of a generic version of the company’s Exparel, the driver of around 95% of the company’s profits in the second quarter.

Pacira’s stock moved steadily down throughout Monday to stabilize and close at $49.45, down 13.22% from Friday’s close of $56.98.

And, while trading volume was insignificant, the trades that were on the tape marked the lowest prices in the bond’s history.

The 0.75% convertibles due Aug. 1, 2025 closed the day at 103.65, markedly lower than Friday’s close at 108.43. Before Monday, they had not dropped below 105 in the two and a half months they have been in the market.

The company sold $350 million of the bonds on July 2, for an issue that ultimately ended up expanding to $402.5 million with the greenshoe exercised.

Southwest lifts

Southwest Airlines managed to beat a down day in the stock market and the stock market closing levels of several other airlines.

Southwest closed the day up 1.31%, with a stock price at $55.06 versus Friday’s close of $54.37.

Lifted in the morning by a Barclays analyst predicting a 38% rise in the stock, Southwest beat declines in the Dow (down 0.94%), the Nasdaq (off 2.14%) and the S&P 500 index (lower by 1.3%).

The airline’s 1.25% convertibles due May 1, 2025 were steadily active throughout Monday and got a boost from the news.

Until recently, the convertibles have not traded above 150 since late July, trading down close to 140 in mid-August.

They hit the 150 mark for the first time in over two months on Sept. 23 and have stayed above that point since that time.

On Monday, though, they jumped.

Closing the day on Friday around 155, the bonds floated up in the morning into the 158 range where they cruised until close and landed at 158.35.

Mentioned in this article:

SoFi Technologies Inc. Nasdaq: SOFI

Pacira BioSciences Inc. Nasdaq: PCRX

Southwest Airlines Co. NYSE: LUV

Upstart Holdings Inc. Nasdaq: UPST

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