Morning Commentary: Pinduoduo convertible notes stabilize; Zendesk active post-earnings

By Abigail W. Adams

Portland, Me., July 30 – The convertibles secondary space saw a quiet start on Friday as equities launched the day in the red.

The Dow Jones industrial average was down 72 points, or 0.21%, the S&P 500 index was down 0.37% and the Nasdaq Composite was down 0.54% shortly before 11 a.m. ET.

There was about $95 million in reported convertibles trading volume about one hour into the session although only a handful of names saw concentrated activity.

Pinduoduo Inc.’s 0% convertible notes due 2025 were again among the most actively traded names in the secondary space with the notes stabilizing after a brutal sell-off earlier in the week that saw the notes drop almost 10 points outright and contract several points on a dollar-neutral, or hedged, basis.

The 0% notes continued to trade around the 92 level early in Friday’s session.

They were changing hands at 92.625 versus an equity price of $90.66, according to a market source.

There was more than $8 million in reported volume.

Pinduoduo’s American Depositary Shares were changing hands at $90.83, a decrease of 1.3%, shortly before 11 a.m. ET.

Zendesk Inc.’s 0.625% convertible notes due 2025 were active with the notes trading down on an outright basis as stock sank following the customer service software company’s earnings report.

The 0.625% notes were down 14 points outright with stock off more than 12%.

The notes were changing hands at 137.625 versus a stock price of $133.69 early in the session.

There was about $4 million in reported volume.

Zendesk’s stock was trading at $132.21, a decrease of 12.16%, shortly before 11 a.m. ET.

Stock plummeted after a top- and bottom-line earnings miss.

Zendesk reported earnings per share of 13 cents versus analyst expectations for earnings of 15 cents.

Revenue was $318.22 million versus analyst expectations for revenue of $320.4 million.

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