Uber convertible notes jump on share buyback; Akamai sinks on earnings; Weibo gains

By Abigail W. Adams

Portland, Me., Feb. 14 – The convertibles primary market remained dormant on Wednesday with the market poised for its second week with no new issuance.

The silence from the primary market has been “eerie,” a source said, with market players expecting a much more robust calendar.

However, stock prices may continue to be a drag on issuance despite a massive run up in equity markets prior to Tuesday’s sell-off.

Many company executives are of the opinion that their company’s stock has bottomed out and has massive upside potential in coming years.

The expectations for a bull run in stock prices has many companies dragging their feet on convertible note issuance, despite the savings in interest costs the convertible market offers, a source said.

While market players awaited a reactivation of the pipeline, the secondary space saw an uptick of activity as equity indexes rebounded after the heavy selling of the previous session.

The Dow Jones industrial average closed Wednesday up 152 points, or 0.40%, the S&P 500 index closed up 0.96%, the Nasdaq Composite index closed up 1.30% and the Russell 2000 index closed up 2.44%.

There was $126 million in reported convertibles trading volume about one hour into the session and $515 million on the tape in the late afternoon.

While investment-grade issues were once again active, topical and earnings-related news were also a driver of trading volume and sparked large price movements in the space.

Uber Technologies Inc.’s convertible notes jumped outright and improved dollar-neutral as stock soared following news of a new stock buyback program.

However, Akamai Technologies Inc.’s convertible notes sank outright as stock dived after a disappointing earnings report.

Weibo Corp.’s 1.375% convertible notes due 2030 (Baa2/BBB) improved in heavy volume on a strong day for the company’s equity.

Uber jumps

Uber’s convertible notes jumped outright and gained dollar-neutral as stock soared after the company announced a new stock buyback program.

Uber’s 0.875% convertible notes due 2028 added 8 points outright with stock up more than 11%.

The notes were trading just shy of 123 versus a stock price of $76.49 early in the session, according to a market source.

They were trading at 123.5 in the late afternoon.

There was $26 million in reported volume.

Uber’s 0% convertible notes due 2025 were also up 8 points outright.

The notes were trading at 111 versus a stock price of $76.49 early in the session and were seen changing hands at 111.5 in the late afternoon.

There was $11 million in reported volume.

The notes gained dollar-neutral on the move up, sources said.

Uber’s stock traded to a low of $74.31 and a high of $79.20 before closing at $79.15, up 14.73%.

Uber’s stock and the convertible notes soared after the company announced its board had authorized a share buyback program of up to $7 billion.

Akamai’s earnings

Akamai’s convertible notes sank outright alongside stock after the cybersecurity company delivered disappointing earnings.

The 0.125% convertible notes due 2025 sank 10 points outright with stock off 8%.

The notes were seen at 123 versus a stock price of $114.21 in the late afternoon, according to a market source.

There was $17 million in reported volume.

Akamai’s 1.125% convertible notes were off 5 points outright.

They were trading at 107.125 versus a stock price of $115.56 in the late afternoon.

There was $12 million in reported volume.

Akamai’s stock traded to a low of $113.81 and a high of $122 before closing at $114.80, down 8.2%.

Stock sank after the company reported mixed earnings results and issued weak guidance.

Akamai beat on the bottom line with earnings per share of $1.69 versus analyst expectations for earnings per share of $1.61.

However, the company missed on the top with revenue of $995 million versus the $999.7 million expected.

Akamai said it expects $980 million to $1 billion in revenue for the first quarter with analyst expectations for revenue of $993 million.

Weibo improves

Weibo’s 1.375% convertible notes due 2030 were on the rise in heavy volume on a strong day for the company’s equity.

The 1.375% convertible notes gained about 1.75 points outright with the company’s equity up 5%.

The notes were trading at 98.5 versus an equity price of $9.19 in the late afternoon, according to a market source.

There was $16 million in reported volume.

Weibo’s American Depositary Shares traded to a low of $8.94 before closing at the intraday high of $9.29, an increase of 5.93%.

Mentioned in this article:

Akamai Technologies Inc. Nasdaq: AKAM

Uber Technologies Inc. NYSE: UBER

Weibo Corp. Nasdaq: WB

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