Snap ‘name of the day’; new convertible notes expand on debut; Xometry notes jump

By Abigail W. Adams

Portland, Me., Feb. 9 – It was an active morning in the convertibles secondary space on Wednesday with a single name accounting for almost one-third of the reported trading volume – Snap Inc.

Snap is “definitely the name of the day,” a source said, with its latest convertible notes offering making its secondary market debut.

Snap’s new 0.125% convertible notes due 2028 saw a strong start in the aftermarket with the notes trading up on an outright and dollar-neutral basis.

The company’s existing 0% convertible notes due 2027 also improved in high-volume activity.

The new paper hit the secondary space on a strong day for the market as equities extended gains with the tech sector leading the rally.

The Dow Jones industrial average closed the day up 305 points, or 0.86%, the S&P 500 index closed up 1.45%, the Nasdaq Composite closed up 2.08% and the Russell 2000 index closed up 1.86%.

There was $295 million in reported volume about one hour into the session and $831 million on the tape about one hour before the market close.

Several struggling convertible notes were on the rise as equities rallied.

Bilibili Inc.’s convertible notes were active and posting gains alongside its equity.

Xometry Inc.’s recently priced 1% convertible notes due 2027 returned to focus with the notes jumping on an outright basis as stock broke out of its rout.

Snap in focus

Snap continued to dominate activity in the secondary space as the camera and social media company’s latest offering made its secondary market debut.

Snap priced an upsized $1.3 billion, from $1.25 billion, of six-year convertible notes after the market close on Tuesday at par at the rich end of talk with a coupon of 0.125% and an initial conversion premium of 50%.

Price talk was for a coupon of 0.125% to 0.625% and an initial conversion premium of 45% to 50%, according to a market source.

The new notes were strong out of the gate and continued to improve as the day progressed.

The 0.125% notes traded in a range of 100.5 to 102.25 early in the session as stock fluctuated between gains and losses.

The notes were changing hands at 101.5 versus a stock price of $37.76 about one hour into the session, according to a market source.

They were changing hands at 103 versus a stock price of $39 in the late afternoon.

The notes expanded 1.5 points dollar-neutral, a source said.

There was $242 million in reported volume on the tape.

Snap’s latest offering “was a very good deal,” a source said. The new paper was well allocated with the small upsize “what the doctor ordered.”

A larger upsize may have resulted in a weaker secondary market performance.

Snap’s 0% convertible notes due 2027 were the second most actively traded issue during Wednesday’s session.

The 0% notes gained about 1 point outright.

They were changing hands at 88.875 versus a stock price of $39.14 in the late afternoon.

The 0% notes improved about 0.5 to 0.75 point dollar-neutral.

There was $34 million in reported volume.

While the 0% notes pared their losses, they remained contracted after losing 1.5 to 2 points dollar-neutral on Tuesday.

Snap’s stock traded to a low of $37.11 and a high of $40.33 before closing the day at $40.28, an increase of 7.24%.

Bilibili active

Bilibili’s convertible notes were on the rise in active trading on Wednesday as the Shanghai-based video sharing website’s equity improved.

Bilibili’s equity-sensitive 1.25% convertible notes due 2027 gained 6 points outright with the company’s equity up over 6%.

The notes were changing hands at 123.875 versus an equity price of $37.02 in the late afternoon.

There was $20.5 million in reported volume.

The company’s more recently priced 0.5% convertible notes due 2026 also made large gains.

The 0.5% notes rose 2.5 points outright to 79.625 in the late afternoon.

The yield on the notes was about 8.86%.

There was about $15 million in reported volume.

Bilibili’s American Depositary Shares traded to a high of $37.74 and a low of $35.30 before closing the day at $36.88, an increase of 6.65%.

While the company’s equity improved on Wednesday, the 0.5% convertible notes remained in busted territory with the conversion premium on the notes 150%.

Xometry jumps

After a rough start in the secondary space, Xometry’s recently priced 1% convertible notes due 2027 jumped in active trading as stock continued its upward momentum.

The 1% convertible notes were up more than 6 points outright.

They were changing hands at 108.875 versus a stock price of $50.88 in the late afternoon.

There was about $9 million in reported volume.

Xometry’s stock traded to a high of $51.12 and a low of $48.94 before closing the day at $50.46, an increase of 3.64%.

Stock has gained about 18% over the past three sessions as equities have broken out of their rout.

The 1% notes have struggled since the company priced the $250 million issue at par on Feb. 1 with the notes closing last week below par.

Mentioned in this article:

Bilibili Inc. Nasdaq: BILI

Snap Inc. NYSE: SNAP

Xometry Inc. Nasdaq: XMTR

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