More carnage in convertibles secondary; DISH falls; Confluent, Bill.com trade lower

By Abigail W. Adams

Portland, Me., May 6 – The convertibles secondary space closed a brutal week with more carnage as equity markets continued their slide from Thursday’s bloodbath.

While at times turning positive in intraday activity, indexes closed the day and week deep in the red.

The Dow Jones industrial average closed Friday down 99 points, or 0.30%, the S&P 500 index closed down 0.57%, the Nasdaq Composite index closed down 1.40% and the Russell 2000 index closed down 1.69%.

There was $110 million of convertibles trading on the tape about one hour into the session and $500 million about one hour before the market close.

While the macro environment continued to drag down the secondary space, earnings remained the focus of trading activity.

Confluent Inc.’s 0% convertible notes due 2027 were in focus with the notes hitting a new all-time low as stock plummeted post-earnings.

Bill.com Holdings Inc.’s 0% convertible notes due 2027 were also lower on an outright and dollar-neutral basis as stock fell double digits despite an earnings beat.

DISH Network Corp.’s convertible notes were also down as stock sank double digits following earnings.

Confluent’s new low

Confluent’s 0% convertible notes due 2027 hit a new low on Friday as stock fell double digits following earnings.

The 0% convertible notes were down 4 points outright with stock off 16%.

They were trading in a tight range of 70 to 70.5 throughout the session, a source said.

The conversion premium on the notes is more than 300%, which makes it difficult to judge the delta they are played on, a source said.

Confluent’s stock traded to a high of $25.24 and a new 52-week low of $21.17 before closing the day at $23.73, a decrease of 16%.

The data streaming service company’s stock sank despite an earnings beat.

The company reported losses per share of 19 cents versus analyst expectations for losses of 21 cents.

Revenue was $126.14 million versus analyst expectations for revenue of $118.49 million.

However, analysts lowered their forecasts for the stock price of Confluent following company warnings of slower growth.

Bill.com’s earnings

Bill.com’s 0% convertible notes were lower on an outright and dollar-neutral basis as stock sank double-digits despite an earnings beat.

The convertible notes were down 2.75 points outright with stock off 13% early in the session.

They were changing hands just shy of 107 versus a stock price of $118 early in the session, according to a market source.

The notes regained some footing and traded up to 109 in the early afternoon.

Over the past two sessions, the convertibles have contracted about 1.5 points, a source said.

Bill.com’s stock traded to a new 52-week low of $109.09 and a high of $134.99 before closing the day at $120.76, a decrease of 20.68%.

Bill.com was under pressure despite an earnings report that beat analyst expectations.

The company reported losses per share of 8 cents versus analyst expectations for losses of 16 cents.

Revenue was $166.9 million versus analyst expectations for revenue of $157.87 million.

DISH under pressure

DISH’s convertible notes were under pressure after the satellite broadcaster reported earnings.

The 0% convertible notes due 2025 fell 10 points outright with stock down 19%.

They were changing hands at 78.5 bid, 79.5 offered in the late afternoon.

The notes were seen contracted about 1.5 points dollar-neutral, a source said.

However, based on the hedge used, some hedge players may have made out on the stock move, another source said.

The 0% notes were the most active of the company’s three outstanding convertible notes.

However, the satellite broadcaster’s 2.375% convertible notes due 2024 and 3.375% convertible notes due 2026 were also lower.

The 2.375% convertible notes due 2024 fell 3 points outright to 89.

The 3.375% convertible notes due 2026 were also down about 3 points outright to 82.

All tranches were also seen weaker dollar-neutral.

DISH’s stock traded to a low of $21.77 and a high of $26.66 before closing the day at $22.22, a decrease of 19.14%.

DISH missed expectations with earnings per share of 68 cents versus analyst expectations for earnings per share of 75 cents.

Revenue was $4.33 billion versus analyst expectations for revenue of $4.39 billion.

The company also reported a loss of subscribers, and there was concern about the lack of monetization of the company’s spectrum ownership.

Mentioned in this article:

Bill.com Holdings Inc. NYSE: BILL

Confluent Inc. Nasdaq: CFLT

DISH Network Corp. Nasdaq: DISH

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.