Convertibles secondary ‘anemic’; Twitter in focus; Bentley Systems trades down to par

By Abigail W. Adams

Portland, Me., June 25 – It was a quiet day in the convertibles secondary space with the summer doldrums in full effect.

Few names were on the tape, and there was little notable movement in the names that did trade, sources said.

“It’s anemic out there,” a source said.

There was $37 million in reported volume about one hour into the session and $252 million in reported volume in the late afternoon.

While the changes were not reflected in trading activity, Friday marked the annual rebalancing of the Russell indexes.

Several convertibles issuers are represented by the Russell 2000 small-cap index, and its rebalancing was closely watched by market players, a source said.

Arbor Realty Trust Inc. is a convertible issuer that is included in the Russel 2000 index.

The REIT’s 4.75% convertible notes due 2022 were active on Friday with the notes trading off on an outright basis alongside stock.

Twitter Inc.’s soon-to-mature 1% convertible notes due Sept. 15, 2021 were the most actively traded name on the tape, although with little movement in price.

Bentley Systems Inc.’s 0.375% convertible notes due 2027 remained volatile on an outright basis with the notes again trading down to par.

While down outright, the notes were unchanged dollar-neutral and held onto the expansion realized on their aftermarket debut.

Arbor Realty on the tape

Arbor Realty Trust’s 4.75% convertible notes due 2022 were active on Friday with stock down as the Russell 2000 index was rebalanced.

The 4.75% notes dropped about 1 point outright with stock off just under 1%.

The notes were changing hands at 110.375 early in the session, according to a market source.

They dropped to 109.375 as the session progressed.

There was about $9 million in reported volume.

Arbor Realty’s stock traded to a high of $18.64 and a low of $18.31 before closing the day at $18.39, a decrease of 0.81%.

The REIT is a member of the Russell 2000 small-cap index, alongside several other convertible issuers.

While activity in the convertibles space was muted, it was a busy day in equity markets as the rebalancing of the Russell indexes sparked a slew of buying and selling activity.

ETFs and portfolios that track the index also rebalanced their holdings to stay in line with the index.

“It’s been a focus,” a source said.

Twitter active

Twitter’s 1% convertible notes due Sept. 15, 2021 were the most actively traded issue in the secondary space as its end-of-life approaches.

The 1% notes were little changed in the high-volume activity.

They were changing hands at 101.75 in the late afternoon.

There was more than $18 million on the tape.

Twitter’s stock traded to a high of $68.92 and a low of $67.28 before closing the day at $67.93, a decrease of 0.47%.

Bentley Systems day two

Bentley Systems’ 0.375% convertible notes due 2027 remained volatile their second day in the secondary space.

The notes traded off about 1 point with stock down 1.6%.

After a volatile market debut on Thursday, the notes stood poised to close Friday at par.

Bentley Systems’ stock traded to a high of $62.10 and a low of $60.50 before closing the day at $60.85, a decrease of 1.6%.

While the notes were trading down on an outright basis, they were unchanged dollar-neutral, a source said.

Bentley Systems’ 0.375% convertible notes traded in a range of 99.75 to 101.

While they dipped below par in the mid-afternoon, they popped back up to 101 at the market close.

However, the notes performed well on hedge and expanded 0.5 to 0.75 point dollar-neutral, sources said.

Mentioned in this article:

Arbor Realty Trust Inc. NYSE: ABR

Bentley Systems Inc. Nasdaq: BSY

Twitter Inc. NYSE: TWTR

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