Twitter gains continue as Musk joins board; Uber down outright, up on hedge; Unity under pressure

By Abigail W. Adams

Portland, Me., April 5 – It was another quiet day in the convertibles secondary space on Tuesday as selling resumed in equity markets amid spiking Treasury yields.

The Dow Jones industrial average closed Tuesday down 280 points or 0.8%, the S&P 500 index closed down 1.26%, the Nasdaq Composite closed down 2.26% and the Russell 2000 index closed down 2.36%.

There was $107 million on the tape a little more than one hour into the session and $394 million on the tape about one hour before the market close.

Trading activity was muted given the move in equities and in Treasuries, a source said.

“I would have thought we’d see more volume on a day like today,” a source said. “There’s some complacency in the market.”

While a weak day for equities, Twitter Inc.’s convertible notes continued to gain in active trading alongside stock after a strong move the previous session.

Uber Technologies Inc.’s 0% convertible notes due 2025 were down outright but up on hedge as stock dropped alongside the broader market.

Unity Software Inc.’s 0% convertible notes due 2026 were also down on an outright basis with stock under pressure during Tuesday’s session.

Twitter in focus

Twitter’s convertible notes remained in focus on Tuesday with the notes continuing to gain on an outright basis alongside stock despite an ugly day for equities.

Twitter’s 0.25% convertible notes due 2024 rose about 2.5 points outright with stock up about 2%.

The 0.25% notes were changing hands at 114.5 versus a stock price of $52.87 early in the session.

They continued to trade on a 114-handle in the late afternoon.

However, the notes were moving inline dollar-neutral, a source said.

The 0.25% convertible notes remained among the most actively traded in the secondary space with $14 million in reported volume.

Twitter’s 0% convertible notes due 2026 rose another 0.375 point outright to trade at 88.375 versus a stock price of $53.18 early in the session.

They continued to trade around 88.375 in the late afternoon.

The notes were also unchanged dollar-neutral.

There was $13 million in reported volume.

Twitter’s stock traded to a high of $54.57 and a low of $50.56 before closing the day at $50.98, an increase of 2.02%.

Twitter has been on a tear since Monday with the social media company’s capital structure lifted following news Tesla Inc. chief executive officer Elon Musk had taken a 9.2% stake in the company.

Twitter announced on Tuesday that Musk would be offered a seat on its board of directors.

On Monday, Twitter’s stock jumped 27% and its 0.25% convertible notes rose more than 9 points outright and expanded a few points dollar-neutral while the 0% convertible notes gained more than 3 points outright and expanded 1 point dollar-neutral.

Uber down outright, up on hedge

Uber’s 0% convertible notes due 2025 were down outright but up on hedge as stock dropped alongside the broader market.

The 0% convertible notes were down about 1.5 points outright with stock off 4%.

They were changing hands at 88.875 versus a stock price of $35.22 in the late afternoon.

The 0% notes improved about 0.25 point on hedge.

There was about $9 million in reported volume.

Uber stock traded to a high of $36.59 and a low of $34.72 before closing the day at $35.07, a decrease of 3.94%.

Unity under pressure

Unity’s 0% convertible notes due 2026 were also trading off as stock fell alongside the broader market during Tuesday’s session.

The 0% notes were down about 1.5 points outright as stock sank almost 7%.

The notes were changing hands at 82.875 versus a stock price of $103.28 in the late afternoon.

While down outright, the notes were moving inline on a dollar-neutral basis.

“That bond looks ugly,” a source said.

There was about $8 million in reported volume.

Unity’s stock traded to a high of $109.99 and a low of $100.86 before closing the day at $101.06, a decrease of 6.98%.

The 0% convertible notes have struggled since pricing in November 2021 with the notes quickly entering into busted territory as growth stocks took a beating.

The notes traded as low as a 77-handle in mid-March but have been on an upswing as equity markets have improved.

The notes traded as high as 84 on Monday, their highest outright level since early March, according to Trace data.

Unity priced a $1.725 billion issue of the 0% convertible notes at par on Nov. 16 when the stock was at $196.01.

Mentioned in this article:

Twitter Inc. NYSE: TWTR

Uber Technologies Inc. NYSE: UBER

Unity Software Inc. NYSE: U

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.