Coinbase convertibles fall as crypto woes worsen; Wolfspeed off outright; Carnival down

By Abigail W. Adams

Portland, Me., Nov. 21 – The convertibles primary market was dormant on Monday following the previous week, which was one of the highest volume weeks of the year for new deal activity.

Prospects for new deal activity during the holiday shortened week are low, sources said.

However, more issuance is expected before the year draws to a close.

Meanwhile, the convertibles secondary space was equally quiet as activity surrounding recent issues tempered and the dovish pivot rally that propelled markets higher early last week continued to falter.

Equity indexes closed Monday in the red with small cap stocks and the tech sector bearing the brunt of the selling pressure.

The Dow Jones industrial average closed Monday down 45 points, or 0.13%, the S&P 500 index closed down 0.39%, the Nasdaq Composite index closed down 1.09% and the Russell 2000 index closed down 0.57%.

There was $40 million on the tape a little more than one hour into the session and $338 million in reported volume about one hour before the market close.

Coinbase Global Inc.’s 0.5% convertible notes due 2026 were one of the most actively traded issues of Monday’s session.

The notes sank to a new historic low as Bitcoin continued to fall and crypto contagion fears spread in the wake of crypto-exchange FTX’s spectacular collapse.

Wolfspeed Inc.’s new 1.875% convertible notes due 2029 remained active with the notes weaker outright but unchanged dollar-neutral.

Carnival Corp.’s recently priced 5.75% convertible notes due 2027 sank further below par on an outright basis as stock continued its downtrend.

Coinbase’s new low

Coinbase’s 0.5% convertible notes due 2026 again plummeted to a new low as Bitcoin failed to hold a key technical support level and contagion fears spread through the crypto industry.

The 0.5% convertible notes fell another 3.5 points outright.

They traded down to 53.25 with the yield now 19.445%.

There was $9 million in reported volume.

The notes were trading on an outright basis although some may still trade them on hedge, a source said.

Coinbase’s stock traded to a new 52-week low of $40.61 and a high of $44.64 before closing the day at $41.23, a decrease of 8.9%.

Monday’s level marks the lowest for the 0.5% notes since the $1.25 billion issue priced at 99 in May 2021.

The 0.5% notes have fallen 12 points outright with stock down about 25% since FTX filed for bankruptcy on Nov. 11.

The spectacular downfall of – until two weeks ago – a powerhouse in the crypto field sparked investor flight from the asset class as contagion fears spread through the industry.

Bitcoin breached the key technical support level of $16,000 on Monday and was trading at $15,861, a decrease of 3.98%, shortly after the close of U.S. equity markets.

Wolfspeed lower outright

Wolfspeed’s 1.875% convertible notes due 2029 were weaker outright but relatively unchanged dollar-neutral in active trade.

The 1.875% notes fell about 1 point outright with stock off about 3%.

The notes were changing hands at 102.875 versus a stock price of $88.78 in the late afternoon.

There was $11 million in reported volume.

Wolfspeed’s stock traded to a high of $91.44 and a low of $88.15 before closing the day at $88.18, a decrease of 3.26%.

The notes have put in a strong secondary market performance since the $1.525 billion issue priced at par on Nov. 16.

The notes traded as high as 104.75 on an outright basis and expanded about 2 points dollar-neutral, sources said.

Carnival weaker

Carnival’s recently priced 5.75% convertible notes due 2027 were weaker in active trading on Monday.

The 5.75% convertible notes were seen at 96.625 versus a stock price of $9.26 early in the session, according to a market source.

They traded at 97.25 versus a stock price of $9.34 in the late afternoon.

There was $8 million in reported volume.

Carnival’s stock traded to a high of $9.53 and a low of $9.13 before closing the day at $9.32, a decrease of 1.53%.

The $1 billion issue, which priced at par on Nov. 15, initially performed well on its aftermarket debut with the notes holding above par and expanding dollar-neutral.

However, the notes have traded below par since their second day in the secondary space.

Mentioned in this article:

Carnival Corp. NYSE: CCL

Coinbase Global Inc. Nasdaq: COIN

Wolfspeed Inc. NYSE: WOLF

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