Morning Commentary: BlackLine convertibles gain outright; Pinduoduo notes active early

By Abigail W. Adams

Portland, Me., May 20 – The convertibles secondary space saw an active start to the day on a choppy morning for equities.

A strong start to the day gave way to selling pressure with equity indexes turning negative shortly before 11 a.m. ET.

The Dow Jones industrial average was down 140 points, or 0.44%, the S&P 500 index was down 0.33%, the Nasdaq Composite index was down 0.40% and the Russell 2000 index was down 0.74% shortly before 11 a.m. ET.

BlackLine Inc.’s 0% convertible notes due 2026 were making gains on an outright basis as stock gained after a surprise earnings beat.

The 0% convertible notes rose 3 points outright with stock up more than 5% early in the session.

The notes were changing hands at 113.13 versus a stock price of $68.59 early in the session, according to a market source.

There was $5 million in reported volume.

BlackLine’s stock was trading at $69.50, an increase of 5.30%, shortly before 11 a.m. ET.

The software company’s stock held onto its strong gains as broader markets turned negative after reporting earnings per share of 1 cent versus analyst expectations for losses per share of 8 cents.

Revenue was $120.24 million versus analyst expectations for revenue of $119.61 million.

Pinduoduo Inc.’s 0% convertible notes due 2025 were active although little changed early in the session.

The 0% notes remained wrapped around 87 early in the session with the yield 9.379%.

There was also about $5 million in reported volume.

The Shanghai-based e-commerce company’s long-busted convertible notes are not equity-sensitive.

However, Pinduoduo’s American Depositary Shares saw a strong open before getting dragged down with broader markets.

The ADSs traded to a high of $44.05 but were changing hands at $41.81, a decrease of 0.56%, shortly before 11 a.m. ET.

The notes were active after China’s central bank made a surprise rate cut.

The rate cut was cited as partly responsible for the strong open of equity markets.

© 2015 Prospect News.
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