Convertibles activity muted; Western Digital notes trade down; Novavax convertibles flat

By Rebecca Melvin

Concord, N.H., Oct. 6 – SoFi Technologies Inc. has been a feature of convertibles secondary market trading for the last week since the online personal finance company priced an upsized $1.1 billion of 0% five-year convertible notes at par. The notes were quoted at 104.375 bid, 104.75 offered shortly before midday on Wednesday when the stock was in negative territory by 3 cents at $16.22.

Subsequently U.S. stocks staged a turnaround, which left the markets solidly higher, and SoFi’s shares closed up 24 cents, or 1.5%, to $16.49 on the day. On Monday the bonds had closed at 103.5 with the stock closing at $16.09.

The convertibles market was trading a little light early Wednesday amid another sell-off in stock markets and amid no new convertibles issuance reported in the primary market to spur activity.

About $155 million of convertible bonds changed hands by late morning, a market source said, citing reported volume.

The active names were a sundry mix. One name that was trading actively and didn’t fully turnaround on the day was Western Digital Corp. Its 1.5% convertible bonds due 2024 were seen as one of the day’s most active traders, and it was trading at 100.25 intraday with the underlying shares down fractionally or by 0.375 point.

The 1.5% convertibles slipped below par later in the session, however, printing at 99 after the market close.

Meanwhile the underlying shares of the San Jose, Calif.-based company also took it on the chin on Wednesday, with the shares notably remaining solidly in the red despite the overall recovery in the broader markets.

The bonds traded against shares that were trading down about 2% plus and heading downward at midmorning. By 11:30 a.m. ET, Western Digital’s stock was down $1.85, or 3.3%, to $55.11, and at the close they were down 53 cents, or 0.9%, at $56.43.

The $17.18 billion market cap hard disk drive maker and storage company has seen a 24% drop its shares in the past six months.

Elsewhere, Novavax Inc.’s convertibles were trading but unchanged for much of the day. The 3.75% convertibles due 2023 were last seen at 146.17, while shares of the vaccine specialist traded downward.

Novavax’s shares were last at $167.46, which was off $2.40, or 1.4%, which was off the session lows. But they faded into the market close, ending down $8.11, or 4.8% at $161.89 and the bond was at 145.4.

Novavax’s shares plunged in September as hopes for its Covid-19 vaccine remain unfulfilled as it continues to await regulatory approval. On Monday, the Gaithersburg, Md.-based company announced new leadership appointments.

Sea Ltd.’s recently priced convertibles gained 1.6 points on Tuesday for a 102 close, which was its session high on Tuesday. Its 0.25% convertibles due 2026, which priced on Sept. 9, were 101.08 last on Wednesday. The underlying shares of the Singapore-based consumer internet company closed down $5.60, or 1.7%, at $315.34.

Meanwhile, stocks staged an impressive midday rally back from losses. The Dow Jones industrial average closed up on Wednesday after being down by well over 400 points intraday. But the Dow finished up 102.32 points, or 0.3%, at 34,416.99. In addition, the S&P 500 index gained 17.83 points, or 0.4%, to 4,363.55 on Wednesday and the Nasdaq Composite came back 68.08 points, or 0.47%, to 14,501,91.

Mentioned in this article:

Novavax Inc. Nasdaq: NVAX

Sea Ltd. NYSE: ADR: SE

SoFi Technologies Inc. Nasdaq: SOFI

Western Digital Corp. NYSE: WDC

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