Convertible secondary adds to gains; Beyond Meat in rare focus; Scorpio exchanges

By Abigail W. Adams

Portland, Me., Nov. 11 – The convertible secondary space ended a volatile week on firm footing with the market adding to the strong gains made during Thursday’s session.

While the market was quiet with U.S. bond markets closed for the Veterans Day holiday, the market continued to move higher, adding to the 0.75 point to 1.25 points expansion made during Thursday’s risk-on frenzy.

While mixed early in the session, equity indexes closed Friday in the green with small cap and tech stocks strengthening.

The Dow Jones industrial average closed Friday up 32 points or 0.1%, the S&P 500 index closed up 0.92%, the Nasdaq Composite index closed up 1.88% and the Russell 2000 index closed up 0.97%.

“It’s nice to see markets recover,” a source said.

While convertible issuers continued to see massive moves in their equity, trading volume on related bonds remained light with few names seeing concentrated trading activity.

Beyond Meat Inc.’s 0% convertible notes due 2027, an issue that rarely trades in volume, was one of the most actively traded issues of Friday’s session.

While the notes got a midsession bump, they stood poised to close the day where they began – at an all-time low.

Scorpio Tankers Inc.’s 3% convertible notes due 2025 saw some action after the company issued a redemption notice for the outstanding amount.

Five9 Inc.’s 0.5% convertible notes due 2025 continued their upward momentum on an outright basis although they were largely unchanged on hedge.

Beyond Meat eyed

Beyond Meat’s 0% convertible notes due 2027 was among the most actively traded issues of Friday’s session.

While the notes saw a midday bump that lifted them as high as 23, they stood poised to end the day where they began, unchanged at 21.5, sources said.

The 0% notes were yielding 38%, a market participant noted.

While the notes continued to wallow in distressed territory, they have potential, a source said.

The premium on the notes is about 200%.

If stock rallies “these things would rip,” a source said.

However, following another large earnings miss, others saw the plant-based meat company as a bankruptcy candidate.

Beyond Meat’s stock continued to add to the strong gains made during Thursday’s session.

Stock traded to a high of $15.48 and a low of $13.63 before closing the day at $15.22, an increase of 7.18%.

Scorpio’s call

Scorpio Tankers’ 3% convertible notes due 2025 were active after the company issued a redemption notice for the notes.

The 3% notes were trading at 149.5 in the late afternoon.

They were changing hands around parity, a source said.

Scorpio Tankers’ stock traded to a low of $47.02 and a high of $49.76 before closing the day at $48.86, a decrease of 1.87%.

Holders of the notes will receive a little “kiss” on the redemption from the make-whole table and conversion rate adjustment made due to the company’s quarterly dividend, a source said.

Holders may convert their notes at a conversion rate of 30.6184 which will be upwardly adjusted due to the 10 cent quarterly dividend. (See related article in this issue)

Scorpio’s 3% convertible notes due 2025 were issued in an exchange for the company’s 3% convertible notes due 2022.

The convertible notes were accretive and carried a yield of 8.25%.

Five9 rises

Five9’s 0.5% convertible notes due 2025 continued to rise on an outright basis on Friday although the notes were largely unchanged dollar-neutral.

The 0.5% notes rose 1 point outright to a 91-handle and stood poised to close the day at 91.25.

The notes were largely unchanged dollar-neutral.

Five9 stock traded to a low of $61.38 and a high of $64.71 before closing the day at $63.54, an increase of 3.76%.

Mentioned in this article:

Beyond Meat Inc. Nasdaq: BYND

Five9 Inc. Nasdaq: FIVN

Scorpio Tankers Inc. NYSE: STNG

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