Booking Holdings convertibles dominate; Invacare slips; Clovis up; Weatherford active

By Abigail W. Adams

Portland, Me., Nov. 6 – The convertible secondary space saw an uptick in trading volume on Tuesday. However, a large portion of the bonds came from one issuer – Booking Holdings Inc.

Booking Holdings’ 0.9% convertible notes due 2021 and 0.35% convertible notes due 2020 were volume leaders in the secondary space as stock popped post-earnings.

However, the bonds were largely unchanged on a dollar-neutral basis.

Invacare Corp.’s 5% convertible notes due 2021 and 4.5% convertible notes due 2022, issues that rarely trade, saw some activity in the secondary space with the notes contracting as stock tanked after an earnings miss.

Clovis Oncology Inc.’s 1.25% convertible notes due 2025 were improved on an outright basis as stock jumped on news a shareholder was going to push for a shake-up on the board of directors.

Weatherford International Ltd.’s 5.875% convertible notes due 2021 remained active in the secondary space with the notes down slightly from their rebound after crashing the previous week.

Booking’s earnings

Booking Holdings’ convertible bonds were the major volume movers in the secondary space on Tuesday. However, the notes saw little price movement dollar-neutral, according to a market source.

The 0.9% convertible notes were changing at 118.75 early in Tuesday’s session with stock up more than 6%, according to a market source.

They were down slightly to 117.75 as stock came in later in the afternoon.

More than $24.5 million of the bonds were on the tape a little over one hour into Tuesday’s session. By late afternoon, $35 million was on the tape.

The online travel booking company’s 0.35% convertible notes due 2020 were changing hands just south of 153.25 early in the session but came in to trade at 150.875 later in the afternoon, sources said.

More than $20 million of the bonds were on the tape by the late afternoon.

Booking Holdings stock traded as high as $2,009.99 but closed the day at $1,949.46, an increase of 4.19%.

Booking reported third-quarter earnings after the market close on Monday.

While the company missed analyst expectations on the bottom line, it beat on the top. Fourth-quarter guidance was also more than anticipated.

Booking reported earnings per share of $37.78 versus analyst expectations of earnings per share of $38.37.

The company reported revenue of $4.85 billion versus analyst expectations for earnings of $4.80 billion.

Booking expects non-GAAP earnings per share between $18.90 and $19.40 in the fourth quarter versus analyst expectations for earnings of $18.69.

Invacare contracts

Invacare’s convertible bonds are typically “sleepy issues,” a market source said.

However, they were active and dropping on an outright and dollar-neutral basis as stock got crushed after the manufacturer and distributor of medical equipment reported third-quarter earnings.

The company’s 5% convertible notes due 2021 dropped about 23 points outright to trade at 82.625. The notes were contracted 3 points dollar-neutral, a market source said.

The 4.5% convertible notes due 2022 dropped about 22 points outright to 80.25. They were contracted 1.25 points dollar-neutral, a source said.

Stock closed Tuesday at $7.47, a decrease of 43.41%.

Invacare reported a loss per share of 40 cents on revenue of $244.56 million in the third quarter versus the consensus estimate for a loss of 30 cents on revenue of $249.50 million.

Clovis improves

Clovis Oncology’s 1.25% convertible notes due 2025 saw slight improvement on an outright basis as stock climbed on news a shareholder would be advocating for a shake-up on the board of directors, a market source said.

The 1.25% convertible notes traded up about 2 points outright to 64 during Tuesday’s session.

Clovis stock closed Tuesday at $15.35, an increase of 7.34%.

The bounce came after Armistice Capital LLC reported it had increased its holding in Clovis Oncology to 9.8% of total outstanding shares.

Armistice Capital may engage in communication with the board, oppose or nominate an alternate slate of class II directors at the annual meeting, propose changes to management and recommend business development transactions including the sale of the issuer, according to the 13D filing with the Securities and Exchange Commission.

The notes have been under pressure in October as stock sank more than 60%.

They took a hit after the pharmaceutical company reported third-quarter earnings on Oct. 31.

The 1.25% convertible notes traded as low as 59 post-earnings, marking the lowest outright price for the notes since they hit the market in mid-April, and dropped 5 points dollar-neutral.

The company’s stock and convertible notes were also under pressure in the run up to the earnings report after Merck and AstraZeneca released positive clinical data for a competing treatment to Clovis’ flagship product Rubraca.

Clovis’ stock was $54.41 when the 1.25% convertible notes priced in April.

Weatherford active

Weatherford’s 5.875% convertible notes due 2021 remained active in the secondary space with the notes leveling off around 76 after a brutal week last week.

Weatherford stock closed Tuesday’s session at $1.32, an increase of 3.94%.

The notes traded as low as 71 last week after the company reported earnings. However, they rebounded to trade as high as 77.

The notes dropped about 10 points dollar-neutral on the downswing last week but improved by a couple points by the week’s close.

While Weatherford is a high premium name that should mostly trade outright, some play the convertible notes with a high delta, due to the credit risks involved, a market source said.

Mentioned in this article:

Booking Holdings Inc. Nasdaq: BKNG

Clovis Oncology Inc. Nasdaq: CLVS

Invacare Corp. NYSE: IVC

Weatherford International Ltd. NYSE: WFT

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