Wayfair, Coinbase active in convertible bond sector with primary quiet

Chicago, May 30 – General news propelled certain convertible bonds into the spotlight on Tuesday, including from issuers Wayfair Inc. and Coinbase Global, Inc.

Trading activity was remarkably muted in the recent offering from Tilray Brands, Inc., a $150 million offering that priced late on Thursday.

A potential nearing on a debt ceiling deal swerved into the hopeful column on Tuesday, leaving equity markets a little lower (Dow Jones industrial average), a little higher (S&P 500 index) or slightly better (Nasdaq-100 index), but no indexes excitingly changed.

Wayfair

Wayfair, the online retailer that has used the convertible bond market almost exclusively for its fundraising needs over the years, was in focus on Tuesday.

After being added to JPMorgan’s analyst focus list, stock surged 11.92% to close at $40.76 against a backdrop of the NYSE Composite index closing up 0.32% after the index briefly flirted with negative territory over the course of the day.

On the JPMorgan add, Wayfair’s 3.25% convertible bonds due 2027 were set in motion, jumping up several points to trade around 89.

The shift upward rewinds the price back to a temporary surge on May 5. The bonds dropped below par at the end of February.

Wayfair’s most recent issue of 3.5% convertibles due 2028 also reaped the benefit from JPMorgan’s spotlight on the company’s stock.

The 3.5% bonds, which priced on May 9, hit 107 several times on Tuesday, to retreat late in the day to a 105 handle with a yield of 2.4%.

Less active, but in play, were Wayfair’s 0.625% convertibles due 2025. Trading prices were up, but less than 1 point, at 82.5 in the late afternoon.

Wayfair’s 1% convertibles due 2026 broke 70 for a yield of 12.26% after lunch.

The notes briefly touched 70 most recently on May 9, before retreating again to the high 60s.

Tilray

Last week’s sole convertible bond offering from Tilray Brands was hardly active as it hit the secondary.

The 5.2% bonds due June 15, 2027 traded below their par issue price, in not much action, at 97.5.

The new issues’ first few trades were reported at 98.

Tilray’s stock did a nosedive after the bond deal was announced, with a concurrent stock transaction.

Stock continued to fall on Monday with shares closing at $1.83, lower by 27.09% over the past five days.

The bonds priced against a May 25 stock price of $2.36 with a set 12.5% initial conversion premium.

The company’s 5% convertibles due later in 2023, in October, came in from a temporary surge on Friday after a partial buyback was announced, a repurchase that had been privately negotiated.

News of the buyback lifted the notes above par during the day on Friday, but in smaller trades they were falling below par again on Tuesday on an outright basis.

Coinbase

Coinbase Global was around 2.5 points to 3 points better on its 0.5% convertible bonds due in June 2026 by day’s end on Tuesday, on news of an upgrade for the company’s stock from Atlantic Equities.

The cryptocurrency exchange’s sole convertible bond issue was trading between 69.5 and 70 on Tuesday, and on the tape in modest activity.

The notes are somewhat liquid, although they do not generally trade every day.

The activity on Tuesday was comparable to days when the bonds do trade, typically a few days each week.

The notes priced in 2021 against a stock price of $239.

Coinbase’s stock was moving at $61.17 on Tuesday, improved by 7.47% on the day.

In the wake of several bankruptcies in the sector, the United States’ largest cryptocurrency exchange has managed to stay afloat.

Simon Clinch of Atlantic Equities put the price target for the company at $70 per share in the next 12 months.

NIO

NIO Inc.’s zero-coupon convertibles due 2026 were a touch more active than usual with the company’s American Depositary Receipts falling 3.77%.

In spite of the activity, the convertible bonds ended the day basically flat at 91.75.

The bonds started the year at 88, and with oscillations in trading prices have steadily picked up approximately 3 points over the past five months.

The Chinese issuer’s ADRs went out at $7.41 per share, off 23.05% since the year started.

SoFi

SoFi Technologies Inc., in a spattering of activity, had its zero-coupon bonds due 2026 higher by around 1 point, at a touch over 73.

The company’s stock jumped 11.46% as news that a U.S. debt ceiling deal on the table includes an unfreezing on student loan payments.

The company’s business, which includes student loan refinancing, would benefit from the current deal.

SoFi’s 0% convertibles priced in 2021 against a stock price of $16.01. The San Francisco company’s stock ended the day at $6.03 per share.

Mentioned in this article:

Coinbase Global Inc. Nasdaq: COIN

NIO Inc. NYSE: NIO

SoFi Technologies Inc. Nasdaq: SOFI

Tilray Brands Inc. Nasdaq: TLRY

Wayfair Inc. NYSE: W

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