Wayfair convertible notes skyrocket on secondary market debut; Lucid, Coinbase gain

By Abigail W. Adams

Portland, Me., Sept. 9 – It was an active day in the convertibles secondary space on Friday although one name accounted for more than 40% of the total reported volume in the space.

Wayfair Inc. was once again the name of the day with its new convertible notes skyrocketing on debut and its outstanding convertible notes active on buybacks.

Wayfair priced $600 million of five-year convertible notes after the market close on Thursday.

The deal was well received, and with its secondary market performance strong, sources forecast more activity from the primary market in the week ahead – provided markets hold.

Equity markets broke three weeks of consecutive losses to close Friday with strong daily and weekly gains.

The Dow Jones industrial average closed Friday up 377 points, or 1.19%, the S&P 500 index closed up 1.53%, the Nasdaq Composite index closed up 2.11% and the Russell 2000 index closed up 1.92%.

There was $500 million in reported volume about one hour before the market close although few names outside of Wayfair saw more than $10 million on the tape.

While volume outside of Wayfair was light, several badly battered names were on the rise in the recent market rally.

Lucid Group Inc.’s struggling 1.25% convertible notes due 2026 and Coinbase Global Inc.’s badly battered 0.5% convertible notes due 2026 were on the rise in active trading.

Wayfair’s day

Wayfair was once again the name of the day with the e-commerce company pricing the first deal of the week.

Wayfair priced $600 million of five-year convertible notes after the market close on Thursday at par with a coupon of 3.25% and an initial conversion premium of 30%.

Pricing came at the rich end of talk for a coupon of 3.25% to 3.75% and at the midpoint of talk for an initial conversion premium of 27.5% to 32.5%, according to a market source.

The new notes skyrocketed on debut.

The 3.25% convertible notes traded up to 104.75 on an outright basis out of the gate and continued to climb as the session progressed.

They were changing hands at 106.25 versus a stock price of $51.69 in the late afternoon.

They gained about 3 points dollar-neutral, sources said.

There was $139 million in reported volume.

Proceeds were used to repurchase $375.4 million in principal of its 1.125% convertible notes due 2024 for an aggregate amount of $336.8 million and $229 million in principal of its 0.625% convertible notes due 2025 for an aggregate amount of $169.3 million.

The buyback price for the 1.125% convertible notes appeared to be 89.3 and for the 0.625% convertible notes 73.55.

The tranches saw $23 million and $19 million in reported volume, respectively.

“Pretty much everyone knew where they were going yesterday,” a source said, with the 1.125% notes expanding 2 points and the 0.625% notes expanding 3 points dollar-neutral.

Wayfair’s 1% convertible notes due 2026 were also active with the notes changing hands at 72.5 mid-afternoon.

There was $14 million in reported volume.

Wayfair’s stock traded to a low of $47.84 and a high of $52.02 before closing the day at $51.99, an increase of 6.49%.

Other active issues

Several struggling convertible notes were lifted during Friday’s session including Lucid’s 1.25% convertible notes due 2026 and Coinbase’s 0.5% convertible notes due 2026.

Lucid’s 1.25% convertible notes rose 1.625 points outright.

They were changing hands at 64.875 in the late afternoon with the yield 12%.

There was $9.5 million in reported volume.

Lucid’s stock traded to a high of $15.42 and a low of $14.93 before closing the day at $15.08, an increase of 0.6%.

Coinbase’s 0.5% convertible notes due 2026 gained 2.875 points outright with stock up more than 10%.

The notes were changing hands at 70.375 versus a stock price of $79.77 in the late afternoon.

There was $7.5 million in reported volume.

Coinbase’s stock traded to a low of $75.15 and a high of $81.04 before closing the day at $80.87, an increase of 10.66%.

Mentioned in this article:

Coinbase Global Inc. Nasdaq: COIN

Lucid Group Inc. Nasdaq: LCID

Wayfair Inc. NYSE: W

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