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Morning Commentary: Snap convertible notes jump in early trading on positive earnings
By Abigail W. Adams
Portland, Me., April 26 – The convertibles secondary space was quiet but firm on Friday as markets shook off the weakness of the previous session sparked by a softer-than-anticipated GDP print.
While the Consumer Price Expenditure report released Friday came in higher-than-expected on an annual basis, the monthly increase of 0.3% was in line with expectations.
Markets took the report as a positive with equity indexes surging and Treasury yields coming in.
The Dow Jones industrial average was up 131 points, or 0.34%, the S&P 500 index was up 1.11%, the Nasdaq Composite index was up 2.11% and the Russell 2000 index was up 0.93% shortly before 11 a.m. ET.
There was $68 million in reported volume about one hour into the session with earnings-related news pushing Snap Inc.’s convertible notes to center stage.
Snap’s convertible notes made strong gains as stock soared after a large earnings beat.
Snap’s 0.125% convertible notes due 2028 jumped 2 points outright as stock soared more than 20%.
They were changing hands at 78 versus a stock price of $14.19 early in the session, according to a market source.
The yield tightened to 6.7%.
There was $16 million in reported volume.
Snap’s more balanced 0.75% convertible notes due 2026 jumped 5 points outright with the notes trading above par for the first time since February.
The 0.75% convertible notes were trading at 101.25 versus a stock price of $14.36 early in the session, a source said.
There was $4 million in reported volume.
Snap’s stock was changing hands at $14.09, an increase of 23.54%, shortly before 11 a.m. ET.
Stock soared after Snap posted a large earnings beat with earnings per share of 3 cents versus the losses per share of 5 cents expected.
Revenue was $1.19 billion versus the $1.12 billion expected.
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