Brookdale on tap; reopening trade in focus; Expedia, Live Nation gain; Airbnb tops par

By Abigail W. Adams

Portland., Me., Sept. 27 – Following an active week, the convertibles primary market slowed its pace on Monday. However, it continued to roll out offerings with one new deal on deck.

Brookdale Senior Living Inc. plans to price $200 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 2% to 2.5% and an initial conversion premium of 30% to 35%, according to a market source.

BofA Securities Inc. is the bookrunner for the Rule 144A offering, which carries a greenshoe of $30 million.

Sources expect new deal activity to remain light for the remainder of the week as accounts prepare to close their books on the third quarter.

Meanwhile, the secondary space saw a slow start to the week as equity markets struggled to find direction amid a rising 10-year Treasury yield.

While the Dow Jones industrial average and Russell 2000 index were positive throughout Monday’s session, the S&P 500 index and Nasdaq Composite launched the day deep in the red, although they pared their losses as the session progressed.

The Dow closed the day up 71 points, or 0.21%, the S&P 500 closed down 0.28%, the Nasdaq Composite closed down 0.52% and the Russell 2000 closed up 1.46%.

After breaking above a yield of 1.5%, the Treasury yield came in to close the day with a yield of 1.486%, which gave some relief to growth stocks pressured during Monday’s session.

However, the secondary space was relatively quiet amid the volatility in equities with many on the sidelines as the end of quarter approaches, a source said.

There was $52 million in reported volume a little more than one hour into the session and $400 million on the tape heading into the market close.

While few names saw concentrated trading activity, the reopening trade once again reared its head following the rollout of booster shots to combat rising Covid-19 cases.

Expedia Inc.’s 0% convertible notes due 2026 (Baa3/BBB-/BBB-) were among the most actively traded names during Monday’s session with the notes continuing to improve.

Live Nation Entertainment Inc.’s convertible notes were on the rise in active trading as stock hit a new 52-week high during Monday’s session.

Airbnb Inc.’s 0% convertible notes due 2026 continued to gain alongside stock with the notes breaking par for the first time since April.

Southwest Airlines Co.’s 1.25% convertibles due 2025 (Baa1/BBB) were active early in the session with the notes moving up alongside stock.

Expedia in focus

Expedia’s 0% convertible notes due 2026 were among the most actively traded issues during Monday’s session with the reopening trade in focus.

The notes continued to improve dollar-neutral as Expedia’s stock pulled back slightly after a strong trend upwards the previous week.

The 0% convertible notes were changing hands at 109.75 versus a stock price of $170.60 in the late afternoon.

The notes improved about 0.25 point dollar-neutral.

There was more than $12 million in reported volume.

The online travel company’s stock traded to a low of $169.19 and a high of $175.37 before closing the day at $169.65, a decrease of 1.36%.

Live Nation’s new heights

Live Nation’s convertible notes were active as the entertainment company’s stock hit a new 52-week high during Monday’s session.

While the notes were largely unchanged dollar-neutral, they were up on an outright basis.

Live Nation’s 2.5% convertible notes due 2023 gained about 4.5 points outright.

They were changing hands at 149 versus a stock price of $94.29.

There was about $7 million in reported volume.

Live Nation’s 2% convertible notes due 2025 rose 1.5 points outright.

They were changing hands at 117 versus a stock price of $94.43.

There was about $5 million in reported volume.

Live Nation’s stock traded to a new 52-week high of $96.50 and a low of $93 before closing the day at $93.64, an increase of 0.97%.

Airbnb tops par

Airbnb’s 0% convertible notes due 2026 broached par during Monday’s session for the first time since April.

The 0% convertible notes were changing hands just shy of 100.125 versus an equity price of $174.48 heading into the market close.

There was about $6 million in reported volume.

Airbnb’s stock traded to a high of $176.32 and a low of $172.02 before closing the day at 174.26, a decrease of 0.92%.

While Airbnb’s stock closed Monday in the red, it has been on a strong upward momentum over the past month and gained more than 11%.

Airbnb’s convertible notes have traded on a 99-handle over the past few sessions as stock climbed above $170.

Airbnb stock’s upward momentum has been supported by a return to the reopening trade, in addition to Mad Money’s Jim Cramer, who has recommended Airbnb be placed on investor’s shopping lists.

Southwest active

While activity in the name petered out as the session progressed, Southwest Airlines’ 1.25% convertibles due 2025 were active early in the session with the notes making gains alongside stock.

The 1.25% convertible notes were changing hands at 155.5 versus a stock price of $54.18 shortly before 11 a.m. ET.

They came in alongside stock and were trading at 153.5 versus a stock price of $53.33 in the late afternoon.

There was $7 million in reported volume.

Southwest Airlines’ stock traded to a high of $54.40 and a low of $52.84 before closing the day at $52.96, an increase of 0.21%.

Mentioned in this article:

Airbnb Inc. Nasdaq: ABNB

Brookdale Senior Living Inc. NYSE: BKD

Expedia Inc. Nasdaq: EXPE

Live Nation Entertainment Inc. NYSE: LYV

Southwest Airlines Co. NYSE: LUV

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