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Morning Commentary: BrightSpring equity units stabilize; SoFi convertible notes jump
By Abigail W. Adams
Portland, Me., Jan. 29 – The convertibles primary market and secondary market were quiet early Monday as markets stare down the Federal Open Market Committee’s Wednesday announcement and a heavy week of earnings.
Equity indexes were either side of unchanged despite the strength in the Treasury market with yields falling across the curve.
The Dow Jones industrial average was down 19 points, or 0.05%, the S&P 500 index was down 0.02%, the Nasdaq Composite index was up 0.11% and the Russell 2000 index was up 0.11% shortly before 11 a.m. ET.
BrightSpring Health Services Inc.’s 6.75% tangible equity units stabilized early Monday after a disastrous trading debut.
The units were up slightly with stock largely unchanged.
The $50-par equity units were trading at $45.50 early Monday, an increase of $0.50 or 1.11%.
BrightSpring’s stock was flat at $11.00.
The units, which priced at $50 alongside BrightSpring’s IPO of 53.3 million shares, which priced at $13 per share, tanked alongside stock on their trading debut last Friday.
Investors balked at the valuation of the heavily debt-ridden company with an IPO of $11 the price target where there was demand, sources said.
While BrightSpring struggled, earnings-related news sparked some large movements in outstanding issues.
SoFi Technologies Inc.’s 0% convertible notes due 2026 popped alongside stock after an earnings beat.
The 0% convertible notes jumped 4 points outright.
They were trading at 85.625 with a yield of about 5.875% early in the session, according to a market source.
There was $8 million in reported volume.
SoFi’s stock was trading at $9.40, an increase of 23.50%, shortly before 11 a.m. ET.
SoFi reported earnings per share of 4 cents, which were largely in line with expectations.
However, the company posted revenue of $594.24 million, which beat expectations for revenue of $571.51 million.
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