Convertibles see $5.95 billion of issuance for week; Tandem gains continue; Rivian rises

By Abigail W. Adams

Portland, Me., March 8 – The convertibles primary market was quiet on Friday after an active week for new deal activity during which $5.95 billion priced in nine deals.

The March 3 week marked the heaviest volume week by face amount for new deal activity since the Nov. 14, 2021 week when $9.629 billion priced in 10 deals.

There are only 13 weeks in the past decade where weekly volume exceeded the $5 billion mark with eight of those weeks falling in 2020 and 2021.

However, the primary market has now broached that threshold twice in the past three weeks with the Feb. 18 week seeing $5.459 billion price in five deals.

The convertibles primary market is expected to continue to unleash deals in the week ahead with some questioning if the active pace is to become a new normal for the market as the issuers that priced in 2020 and 2021 refinance.

While there was some concern about indigestion, demand for new paper remained strong amid the deluge with the majority of deals to price putting in strong aftermarket performances.

Meanwhile, it was a day of big reversals in the secondary space as a strong start for equity markets gave way to a heavy close.

Equity markets were strong on the heels of the latest U.S. Nonfarm Payrolls report, which came in hotter-than-expected but also reflected an unexpected uptick in unemployment.

However, equities rolled over as Nvidia, which re-sparked the AI frenzy over the past two weeks, rolled over and closed the day in the red.

The Dow Jones industrial average closed Friday down 69 points, or 0.18%, the S&P 500 index closed down 0.65%, the Nasdaq Composite index closed down 1.16% and the Russell 2000 index closed down 0.10%.

There was $107 million on the tape about one hour into the session and $677 million in the late afternoon.

Activity surrounding the deals to price over the past week continued to temper although Tandem Diabetes Care Inc.’s 1.5% convertible notes due 2029 remained in focus with the notes shooting higher on an outright and dollar-neutral basis.

Global Payments Inc.’s 1.5% convertible notes due 2031 (Baa3/BBB-) dominated trading on Friday with the notes joining the Refinitiv convertible indices.

The wild ride in Rivian Automotive Inc.’s convertible notes continued with the notes again on the rise after crumbling post-earnings after a slate of positive headlines.

Tandem shoots higher

Tandem’s new 1.5% convertible notes due 2029 added to their blockbuster gains in active trading on Friday.

The 1.5% notes were up another 1.5 points outright.

They traded as high as 112 in intraday activity and were seen changing hands at 111 versus a stock price of $29.42 in the late afternoon.

The notes expanded another 0.5 point to 0.75 point dollar-neutral, a source said.

There was $17 million in reported volume.

Tandem’s stock traded to a low of $28.95 and a high of $31.01 before closing at $30.70, up 3.47%.

The 1.5% notes have gained almost 4 points on hedge since the deal priced at par on March 5.

Global Payments active

Global Payments’ 1.5% convertible notes due 2031 dominated the tape on Friday as the notes entered the Refinitiv convertible indices.

While the notes were higher on an outright basis, they were largely moving in line dollar-neutral, a source said.

The 1.5% notes were seen at 102.75 versus a stock price of $129.66 in the late afternoon.

There was $53 million in reported volume.

Global Payments’ stock traded to a low of $129.41 and a high $130.68 before closing at $129.63, an increase of 0.51%.

Rivian’s ride

The wild ride in Rivian’s convertible notes continued on Friday with the convertible notes continuing to gain on an outright and dollar-neutral basis as stock climbed.

The 4.625% convertible notes due 2029 added another 2.5 to 3 points outright after shooting up 8 points the previous session.

The notes were trading at 91.125 versus a stock price of $12.75 in the late afternoon.

There was $15 million in reported volume.

The 3.625% convertible notes due 2030 added another 2 points outright after shooting up 7 points the previous session.

They were trading at 78.125 versus a stock price of $12.54 in the late afternoon.

There was $11 million in reported volume.

Both tranches have added 1.5 points dollar-neutral over the past two sessions.

Rivian’s stock traded between $12.42 and $13.64 before closing at $12.78, up 2.16%.

Stock has gained about 17% over the last two sessions with a slate of headlines from the company reigniting buying interest.

Rivian announced on Thursday that it was delaying construction on its $5 billion factory in Georgia, which will result in about $2 billion in savings.

The company also unveiled three new cheaper vehicles.

There are also market rumors about Apple Inc. investing in the company after Apple abandoned its own internal EV ambitions.

“That would be a huge win,” a source said.

While a high-flyer at the start of the year, Rivian’s convertible notes crashed and burned as stock collapsed post-earnings with weak demand for EVs and the company’s large cash burn rate spooking investors.

Mentioned in this article:

Global Payments Inc. NYSE: GPN

Rivian Automotive Inc. Nasdaq: RIVN

Tandem Diabetes Care Inc. Nasdaq: TNDM

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