Morning Commentary: Bill.com Holdings convertible notes in focus post-earnings

By Abigail W. Adams

Portland, Me., Feb. 3 – It was an active morning in the convertibles secondary space as the intense rally in tech and growth stocks over the past two sessions paused.

While credit and equity markets surged on the back of a dovish tilt in Federal Reserve chair Jerome Powell’s Wednesday’s statement, Friday’s release of the U.S. non-farm payrolls report dampened market optimism about a pause in the rate hikes.

Equity indexes launched Friday’s session deep in the red but turned mixed as the session progressed with plenty of buyers still in the market.

The Dow Jones industrial average was up 11 points, or 0.03%, the S&P 500 index was down 0.21%, the Nasdaq Composite index was down 0.12% and the Russell 2000 index was up 0.05% shortly before 11 a.m. ET.

The convertibles secondary space remained active with $117 million in reported volume although activity was concentrated in a few issues.

Bill.com Holdings Inc. was the name of the day with its convertible notes down outright as stock dived double digits post-earnings.

Bill.com’s 0% convertible notes due 2025 fell 11 points outright with stock off 24% in early trading.

The notes were changing hands at 100.5 versus a stock price of $99.55 about one hour into the session, according to a market source.

The notes were unchanged to contracted dollar-neutral on the move down, a source said.

There was $30 million in reported volume.

Bill.com’s 0% convertible notes due 2027 were down 3 points outright.

The notes were seen at 79.5 versus a stock price $99.16 early in the session.

There was $5 million in reported volume.

Bill.com’s stock was trading at $96.71, a decrease of 25%, shortly before 11 a.m. ET.

Stock tanked despite a large earnings beat with the accounting software company reporting earnings per share of 42 cents versus analyst expectations of 20 cents and revenue of $260 million versus analyst expectations for revenue of $245 million.

However, weak guidance sparked a sell-off in the stock.

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