Convertibles secondary activity at a crawl; MongoDB notes in focus; Nutanix expands

By Abigail W. Adams

Portland, Me., Sept. 1 – The convertibles secondary space was at a crawl ahead of the Labor Day holiday in the United States.

While large swaths of the market sat out Friday’s session with real activity not expected to commence until the market reopens on Tuesday, market moving macro data continued to roll in.

Equity indexes saw a strong start to the session following the latest U.S. nonfarm payroll report, which was widely referred to as the goldilocks report the Fed had hoped for.

While the market continued to dial back its expectations for a November rate increase, indexes gave back much of their early day gains and turned mixed as the session progressed.

The Dow Jones industrial average closed Friday up 116 points, or 0.33%, the S&P 500 index closed up 0.18%, the Nasdaq Composite index closed down 0.02% and the Russell 2000 index closed up 1.07%.

There was $22 million in reported convertibles trading volume about one hour into the session and $170 million on the tape in the late afternoon.

While volume was light, there were some large price movements with earnings sparking volatility in company stocks.

MongoDB Inc.’s deep-in-the-money 0.25% convertible notes due 2026 shot higher alongside stock after a strong earnings beat.

Nutanix Inc.’s 0.25% convertible notes due 2027 made large outright and dollar-neutral gains also on the heels of a large earnings beat.

CMS Energy Corp.’s 3.375% convertible notes due 2028 (Baa2) and Southern Co.’s 3.875% convertible notes due 2025 (Baa2/BBB) saw some action early in the session although activity petered out as the session progressed.

MongoDB’s earnings

MongoDB’s deep-in-the-money 0.25% convertible notes due 2026 shot higher alongside stock on the heels of a better-than-expected earnings report.

The notes jumped 9 points outright with stock up almost 4%.

The convertibles were changing hands at 192.625 versus a stock price of $397.80 in the late afternoon.

There was $9 million in reported volume.

The notes expanded on the move up, a source said.

MongoDB’s stock traded to a low of $389.33 and a high of $414 before closing at $392.88, an increase of 3.04%

Stock was on the rise after the software company crushed analyst expectations for second-quarter earnings.

MongoDB reported earnings per share of 93 cents versus analyst expectations for earnings of 46 cents.

Revenue was $423.8 million versus the $393.7 million expected.

Nutanix’s earnings

Nutanix’s 3.375% convertible notes due 2027 made large outright and dollar-neutral gains after also delivering a large earnings beat.

The 3.375% convertible notes jumped 4 points outright with stock up 12%.

The notes were changing hands at 91.5 versus a stock price of $35.44 in the late afternoon, according to a market source.

The notes gained about 1 point dollar-neutral.

There was $4 million in reported volume.

Nutanix’s stock traded to a low of $34.10 and a high of $36.50 before closing at $34.90, an increase of 12.22%.

Stock shot higher after the software company also delivered a large earnings beat.

Nutanix reported earnings per share of 24 cents versus analyst expectations for earnings per share of 16 cents.

Revenue was $494 million versus analyst expectations for revenue of $476 million.

Early trades

CMS Energy’s 3.375% convertible notes due 2028 and Southern Co.’s 3.875% convertible notes due 2025 (Baa2/BBB) were active early in the session although activity in the names diminished as the session progressed.

CMS Energy’s 3.375% notes were changing hands at 96.125 versus a stock price of $56.21 early in the session, according to a market source.

They were seen changing hands at 95.875 versus a stock price of $55.76 in the late afternoon.

There was $4.5 million in reported volume.

CMS’ stock traded to a low of $54.83 and a high of $56.55 before closing at $55.39, a decrease of 1.42%.

Southern Co.’s 3.875% convertible notes due 2025 (Baa2/BBB) were trading at 98.875 versus a stock price of $68.21 early in the session.

There was $2.5 million in reported volume.

Southern Co.’s stock traded to a low of $66.41 and a high of $68.52 before closing at $67.21, off 0.72%.

Mentioned in this article:

CMS Energy Corp. NYSE: CMS

MongoDB Inc. Nasdaq: MDB

Nutanix Inc. Nasdaq: NTNX

Southern Co. NYSE: SO

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