Carvana drops following exchange offer; Luminar convertible notes up; BridgeBio better

By Cristal Cody

Tupelo, Miss., July 19 – With the primary remaining quiet, convertible market participants focused Wednesday on Carvana Co.’s high-yield bond exchange announcement.

Carvana’s bonds “have been creeping up, but the stock was up 12 points pre-opening,” a source said.

Carvana’s 10¼% senior notes due 2030 (Ca/CCC-) dropped about 3¼ points over the session and were down 5 points on the week.

The 5½% notes due 2027 (Ca/CCC-) shaved off more than 5 points from Tuesday but were up about 2½ points from Friday.

Shares in the online car retailer rallied 40.2% on the day to more than $55 in heavy trading.

Carvana’s stock closed at $39.80 on Tuesday and climbed to as high as $56 before the market opened on Wednesday.

“These shares were trading around $10 three months ago,” the source noted. “The bonds had gotten down to as low as 50 cents on the dollar, and even through they’re not convertible, a lot of the convertible players flow over to junk and specially distressed situations.”

Stocks moved off the morning’s gains as volatility climbed over the day.

The S&P 500 index closed up 0.24%, the Nasdaq rose 0.03% and the Dow Jones industrial average added 0.31%. The Russell 200 index finished 0.45% higher.

Early Wednesday, the S&P 500 was up 0.45%, the Nasdaq headed 0.52% higher, the Dow was 0.45% better and the Russell 200 index was 0.5% better.

The CBOE Volatility index rose 3.46% over the session to 13.76.

Trading stayed quiet in the convertibles space on Wednesday, sources reported.

Luminar Technologies, Inc.’s convertible notes climbed further over the afternoon after improving early in the session in active secondary supply.

Luminar’s 1.25% notes due 2026 went out more than 2 points higher.

BridgeBio Pharma, Inc.’s convertible notes also continued to improve modestly following gains at the start of the week.

Carvana declines

Carvana’s 10¼% senior notes due 2030 (Ca/CCC-) dropped more than 2 points to 79 going out Wednesday, sources said.

The issue has rebounded from trading with a handle in the low 50s in March.

The 5½% senior notes due 2027 (Ca/CCC-) moved down to 69¼ bid in active trading from 75 bid the previous day but still up from where the paper went out in the prior week at 66¾ bid.

Carvana’s other notes also remained stronger on the week.

The 5.625% senior notes due 2025 (Ca/CCC-) were trading 2 points higher this week at 92 and a yield of 9¾%.

Carvana’s stock (Nasdaq: CVNA) closed the session up 40.2% at $55.80 in heavy secondary volume totaling more than 115 million shares.

Shares traded from $47.10 to as high as $56.92 over the day.

Carvana on Wednesday released its second-quarter results and said it had its best quarter on record.

The company also filed to sell $1 billion of its class A common stock, announced an exchange offer and agreement to eliminate more than 83% of its senior notes and reduce its total outstanding debt by more than $1.2 billion and started a tender offer to purchase some of its 2025 notes.

Carvana plans to exchange its existing senior notes for up to $4.376 billion in three tranches of new notes.

Luminar higher

Luminar’s 1.25% convertible notes due 2026 went out 2.7 points higher at 72.99 and a 10.98% yield after improving 1.5 points over the morning, a source said.

The equity was priced at $7.65, up from $7.27 in early trading.

Early in the session, Luminar’s 1.25% convertibles traded around 71.75 and an 11.5% yield on $11 million of volume, while the equity was priced at $7.27.

Common shares (Nasdaq: LAZR) traded late in the morning 5.39% higher at $7.61 and closed the day up 7.19% at $7.75.

Luminar’s bond is an equity sensitive issue, according to a market source.

The Gross Law Firm announced in a press release Wednesday that it notified Luminar shareholders of a class action lawsuit with the firm looking for a lead plaintiff by the July 25 deadline.

The lawsuit alleges that during the class period from Feb. 28 through March 17, the company issued materially false and/or misleading statements or failed to disclose that “Luminar had misappropriated an image of a competitor's photonic integrated circuit to market the company's own products and capabilities.”

BridgeBio Pharma up

BridgeBio Pharma’s 2.25% notes due 2029 continued to eke out gains on Wednesday after Monday’s rally with the issue more than 0.5 point better at a print of 80.85 and a yield of 6.42%, while the equity was seen at $34.48, a source said.

The notes saw $7.5 million of paper changing hands.

The issue added around 0.75 point on Tuesday on $19 million of secondary activity.

The paper went out Friday at 63.5 and a 11.29% yield.

BridgeBio Pharma’s stock finished Wednesday 5.97% higher at $34.46.

The stock pulled back from trading 6.03% higher at $34.45 over the morning.

The convertible notes went out Tuesday 1 point higher at 106.946 and a 0.576% yield, while the equity traded at $32.70.

BridgeBio Pharma’s paper kicked off the rally on Monday with its stock closing at nearly double Friday’s closing price, from $18.22 on Friday to over $30 on Monday and Tuesday.

Mentioned in this article:

Carvana Co. NYSE: CVNA

Luminar Technologies, Inc. Nasdaq: LAZR

BridgeBio Pharma, Inc. Nasdaq: BBIO

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