Convertibles secondary market generally quiet; MongoDB, Kadmon generate attention

By Abigail W. Adams

Portland, Me., Oct. 21 – It was a quiet day in the convertibles secondary space on Thursday with trading volume light as the primary market stood poised for its third week of no new deal activity.

While equity markets were strong in the face of a rising 10-year Treasury yield as earnings came in better than expect, it did not spark much trading activity.

Tech, growth and small cap stocks outperformed on Thursday with the S&P 500 index notching a fresh record.

While the Dow Jones industrial average closed the day in negative territory, it rallied off its lows to close the day largely flat.

The Dow closed the day down 6 points, or 0.02%, while the S&P 500 index closed the day at a new all-time high of 4,549.78, an increase of 0.3%.

The Nasdaq Composite closed up 0.62% and the Russell 2000 index closed up 0.27%.

Despite the strength in equities, activity in the secondary space was muted.

There was $70 million in reported volume about one hour into the session and $415 in reported volume about one hour before the market close.

Kadmon Holdings Inc.’s 3.625% convertible notes due 2027 were among the most actively traded issues in the secondary space as Sanofi’s acquisition of the company passed a hurdle.

MongoDB Inc.’s 0.25% convertible notes due 2026 also saw heavy volume as the software company’s stock broached its 52-week high.

Snap Inc.’s 0% convertible notes due 2027 were also active in anticipation of the company’s third-quarter earnings.

Stock plummeted in after-hours trading following the results.

Kadmon’s acquisition

Kadmon’s 3.625% convertible notes due 2027 were active on Thursday as stock popped with the company’s acquisition clearing a hurdle.

The 3.625% notes jumped 4 points outright with stock up 9%.

The notes traded up to 150 early in Thursday’s session. They were changing hands at 152.5 versus a stock price of $9.39 in the late afternoon, according to a market source.

There was about $10 million in reported volume.

Kadmon’s stock traded to a low of $9.34 before closing the day at the session high of $9.42, an increase of 9.53%.

Kadmon’s convertible notes and stock jumped following news the waiting period in connection with Sanofi’s bid for the acquisition of the biotech firm expired on Oct. 20.

Sanofi announced its intention to acquire Kadmon in early September for $9.50 a share.

The deal is expected to close in the fourth quarter.

MongoDB in focus

MongoDB’s 0.25% convertible notes due 2026 were in focus on Thursday with the high dollar-price bonds climbing as stock hovered near its 52-week high.

The 0.25% convertible notes were changing hands at 247 versus a stock price of $511 early in the session.

The notes were trading at 247.25 versus a stock price of $514.89 in the late afternoon.

There was about $14 million in reported volume.

MongoDB’s stock traded to a high of $517.25 and a low of $502.19 before closing the day at $509.43, an increase of 0.98%.

Stock has gained almost 4% over the past week as equity markets rallied.

Snap’s earnings

Snap’s 0% convertible notes due 2027 were active although little changed as the market prepared for the social media company’s earnings report.

The 0% convertible notes were changing hands at 117.5 versus an equity price of $75.26 in the late afternoon.

There was about $10 million in reported volume.

Snap’s stock traded to a low of $73.89 and a high of $75.95 before closing the day at $75.11, a decrease of 0.71%.

However, stock tanked after-hours following the company’s earnings report.

Stock was down more than 23% shortly after 5 p.m. ET as investors digested the company’s earnings.

While Snap beat on the bottom line, it missed on the top and issued a warning about the impact of Apple’s iPhone privacy changes.

Snap reported earnings per share of 17 cents versus analyst expectations for earnings of 8 cents.

However, revenue was $1.07 billion versus analyst expectations for earnings of $1.10 billion.

Mentioned in this article:

Kadmon Holdings Inc. Nasdaq: KDMN

MongoDB Inc. Nasdaq: MDB

Snap Inc. NYSE: SNAP

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