Sea convertible notes in focus, gain; SoFi higher outright; Western Digital trades down

By Abigail W. Adams

Portland, Me., Oct. 12 – There was an uptick of activity in the convertibles secondary space on Tuesday on another volatile day for equities.

Equity indexes again wavered between gains and losses before closing the day mixed.

The Dow Jones industrial average closed the day down 118 points, or 0.34%, the S&P 500 index closed the day down 0.24%, and the Nasdaq Composite closed the day down 0.14%.

However, small cap stocks and the equities of convertible issuers outperformed the broader market, a source said.

The Russell 2000 index closed the day up 0.62% and the SPDR Bloomberg Barclays Convertible Securities ETF closed Tuesday at $85.81, an increase of 0.72%.

There was $75 million in reported volume in the convertibles secondary space a little over one hour into the session and $413 million in reported volume about one hour before the market close.

While trading volume increased, many remained in wait-and-see mode with the latest consumer price index data set to be released on Wednesday in addition to the launch of third-quarter earnings.

Recent issues continued to dominate the tape.

Sea Ltd.’s 0.25% convertible notes due 2026 were the most active name in the secondary space with the notes improved on an outright and dollar-neutral basis.

SoFi Technologies Inc.’s 0% convertible notes due 2026 again rose on an outright basis as stock continued its upward momentum.

However, the notes were largely moving in line dollar-neutral.

Western Digital Corp.’s 1.5% convertible bonds due 2024 were also active and trading down alongside stock with semiconductor companies under pressure during Tuesday’s session.

Sea in focus

Sea’s 0.25% convertible notes due 2026 were in focus on Tuesday with the notes improving on an outright and dollar-neutral basis.

The 0.25% convertible notes were up about 1.5 points outright with the company’s equity up over 2%.

The notes were changing hands just shy of 102 versus an equity price of $319.45 early in the session.

They rose to trade at 102.875 versus a stock price of $329.57 in the late afternoon.

The notes improved dollar-neutral on the move up, a source said.

There was more than $28.5 million in reported volume.

Sea’s American Depositary Shares traded to a low of $315.58 and a high of $330.02 before closing the day at $324.90, an increase of 2.79%.

The $2 billion issue has been a mainstay on the volume charts since pricing on Sept. 10.

SoFi gains outright

SoFi Technologies’ 0% convertible notes due 2026 remained active in the secondary space with the notes continuing to gain alongside stock.

The 0% convertible notes were up another 1.5 points outright with stock up 3%.

They were changing hands at 112.875 versus a stock price of $18.74 in the late afternoon.

The notes were largely moving in line dollar-neutral, a source said.

SoFi’s stock continued its upward momentum on Tuesday.

Stock traded to a low of $17.84 and a high of $19.02 before closing the day at $18.97, an increase of 3.15%.

Stock shot up more than 13% on Monday following a bullish analyst report from Morgan Stanley, which set a price target of $25.

However, the convertible notes contracted dollar-neutral on Monday’s move up.

Western Digital eyed

Western Digital’s 1.5% convertible bonds due 2024 were active and trading down alongside stock on Tuesday.

The 1.5% convertible notes traded down 1.5 points outright with stock off more than 3% during Tuesday’s session.

The notes were changing hands at 100.5 versus a stock price of $55.30 early in the session.

They traded down to par versus a stock price of $53.97 in the late afternoon.

There was $11 million in reported volume.

Western Digital’s stock traded to a high of $56.35 and a low of $53.61 before closing the day at $54.20, a decrease of 3.51%.

The computer hard disk drive manufacturer and data storage company’s stock was under pressure alongside the broader semiconductor sector on Tuesday.

Semiconductor companies were trending lower on Tuesday following a report by TrendForce, which forecast a drop of 3% to 8% in DRAM memory chips due to a looming supply glut.

Mentioned in this article:

Sea Ltd. NYSE: SE

SoFi Technologies Inc. Nasdaq: SOFI

Western Digital Corp. Nasdaq: WDC

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