Convertibles trading quiet; Oasis Petroleum in focus on bankruptcy; Integra gains

By Abigail W. Adams

Portland, Me., Sept. 30 – The convertibles primary market was again dormant on Wednesday with the week poised to be another week with no new deals.

While the convertible primary market has already broken records for new deal activity with $93.46 billion pricing year to date, activity tempered in September.

In all, $6.31 billion priced over 13 deals in September, which was half of the amount that priced in September 2019 when 21 deals totaling $12.63 billion cleared the primary market, according to Prospect News data.

However, there may be a surge of activity in October as issuers attempt to get ahead of Election Day volatility, sources said.

Meanwhile, trading activity in the convertibles secondary space was relatively light on Wednesday with end-of-month and end-of-quarter activity failing to garner heavy trading volumes.

There was $62 million in reported volume about one hour into the session and $385 million in reported about one hour before the market close.

While volume was light, the market was strong as equities ended the quarter with gains, despite a pullback from intraday highs heading in the late afternoon.

Despite the gain in equities, market players were beefing up on their defensive positions following Tuesday’s contentious presidential debate and growing political uncertainty.

Buyers were “certainly looking for defensive merchandise...names that will provide some downside protection,” a source said.

Oasis Petroleum Inc.’s 2.625% convertible notes due 2023 were in focus on Wednesday following the company’s bankruptcy filing.

Shopify Inc.’s 0.125% convertible notes due 2025 remained major volume movers with the notes improving dollar-neutral following an analyst upgrade.

Integra Lifesciences Holdings Corp.’s 0.5% convertible notes due 2025 were active with the notes gaining strength following news of an asset sale.

Oasis Petroleum in focus

Oasis Petroleum’s 2.625% convertible notes due 2023 were in focus on Wednesday with the notes improved following the company’s bankruptcy filing.

The notes traded in a wide range in the high-volume activity, dropping as low as 21 and trading as high as 23.75, according to a market source.

Holders were “throwing them out the window,” a source said of the trading activity.

However, the notes were improved from previous levels.

The long-busted convertible notes were changing hands at 20 in early September.

They were in the single digits in March, April and May, according to Trace data.

The oil and gas company filed for Chapter 11 bankruptcy protection on Wednesday after reaching a restructuring agreement with lenders, which included certain holders of the 2.625% notes.

The bankruptcy filing was widely anticipated, particularly after the company missed the coupon payment on the 2.625% notes in mid-September.

Oasis priced a $325 million issue of the 2.625% convertible notes in 2016.

Shopify upgraded

Shopify’s 0.125% convertible notes due 2025 remained major volume movers on Wednesday with the notes improving after trading sidewise in previous sessions.

The 0.125% notes were changing hands at 111.875 in the late afternoon.

They gained about 0.25 point dollar-neutral, a source said.

Shopify’s stock traded to a high of $1,043 and a low of $1,014.35 before closing the day at $1,022.97, a decrease of 0.27%.

While stock ended the day in the red, it was on the rise for the majority of Wednesday’s session.

Shopify was upgraded to “outperform” from “neutral” by a Wedbush analyst on Wednesday with the price target lifted to $1,300 from $998.

Integra active

Integra’s 0.5% convertible notes due 2025 were active and making gains after the company announced an asset sale.

The 0.5% notes were up about 1 point outright to 94.625 in the late afternoon.

The notes also “popped a little” during Tuesday’s session following news of the asset sale, a source said.

Integra announced on Tuesday that it was selling its extremity orthopedics business to Smith+Nephew for $240 million in cash, according to a company news release.

Integra’s stock was making gains on Wednesday although it was down alongside the broader market the previous session.

Stock traded to a high of $47.83 and a low of $45.40 before closing Wednesday at $47.22, an increase of 1.72%.

However, the notes move on a light delta with the conversion premium more than 70%.

Mentioned in this article:

Integra Lifesciences Holdings Corp. Nasdaq: IART

Oasis Petroleum Inc. Nasdaq: OAS

Shopify Inc. NYSE: SHOP

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