Coinbase convertibles lower outright; MP Materials on the rise; DigitalOcean active

By Abigail W. Adams

Portland, Me., April 9 – The convertibles primary market remained dormant on Tuesday with April expected to be a light month for new deal activity.

However, there are deals in the pipeline with the primary market expected to resume an active pace in May.

Meanwhile, it was another quiet and flat day in the secondary space on Tuesday as equity indexes wavered ahead of Wednesday’s Consumer Price Index report with market players reassessing their rate cut expectations.

Markets have widely anticipated June as the start of the Fed’s rate cut campaign; however, still strong inflationary reports have called those expectations into question.

While either side of unchanged at the open, indexes saw some selling pressure as the session progressed only to rebound and close the day either side of unchanged.

The Dow Jones industrial average closed Tuesday down 9 points, or 0.02%, the S&P 500 index closed up 0.14%, the Nasdaq Composite index closed up 0.32% and the Russell 2000 index closed up 0.34%.

There was $89 million in reported convertibles trading volume about one hour into the session and $422 million on the tape in the late afternoon.

While trading volume remained light, there was a broader swath of names in play than the high-grade centric trading of the previous session.

Coinbase Global Inc.’s 0.25% convertible notes due 2030 were moving lower alongside stock after a run-up the previous session.

MP Materials Corp.’s 3% convertible notes due 2030 were on the rise with the notes popping above par for the first time since shortly after pricing and expanding dollar-neutral after receiving government subsidies.

DigitalOcean Inc.’s 0% convertible notes due 2026 were active during Tuesday’s session although with little movement in price.

Coinbase down outright

Coinbase’s 0.25% convertible notes due 2030 were active on Tuesday with the notes lower as stock gave back all gains from a strong session on Monday.

The notes were down about 1 point outright and trading at 103.875 versus a stock price of $253 early in the session.

They continued to move lower alongside stock as the session progressed and were trading at 101.625 versus a stock price of $244.79 in the late afternoon.

While down outright, the notes were largely moving in line with stock, a source said.

There was $13 million in reported volume.

Coinbase’s stock traded to a low of $241.10 and a high of $254.55 before closing at $242.95, down 5.46%.

The crypto-currency exchange’s stock gave back nearly all gains after a strong run-up the previous session.

While a strong session for Bitcoin on Monday may have bolstered Coinbase, the company is once again in legal crosshairs after an appeals court partially revived a class action lawsuit initially dismissed in 2023.

The lawsuit was related to the sale of tokens as unregistered securities.

MP Materials gains

MP Materials’ 3% convertible notes due 2030 were on the rise on the heels of positive headlines with the notes popping above par for the first time since shortly after pricing and expanding dollar-neutral.

The 3% notes added about 4.5 points outright with stock up almost 9%.

They were trading at 104.125 versus a stock price of $17.22 in the late afternoon.

The notes added 0.5 point dollar-neutral on the move up.

MP Materials’ stock traded to a low of $16.31 and a high of $17.53 before closing at $17.44, up 8.86%.

The rare-earth mining company’s stock and convertible notes were on the rise after the company announced it had received $58.5 million in project tax credit allocations from the IRS and Treasury Department.

The awards will be used to advance construction of the company’s rare earth magnet manufacturing facility.

The 3% convertible notes have struggled since the $747.5 million issue priced at par on March 4.

The notes traded as low as 89 in late March but have been on an upward trend over the past week.

DigitalOcean active

DigitalOcean’s 0% convertible notes due 2026 were active early in Tuesday’s session although activity in the name petered out as the session progressed.

While active, the notes saw little movement in price.

The 0% convertible notes were trading at 84.125 versus a stock price of $37 early in the session, according to a market source.

They were wrapped around 84 heading into the market close.

The yield on the high-premium notes was about 6.625%.

There was $8 million in reported volume.

DigitalOcean’s stock traded to a low of $36.76 and a high of $37.69 before closing at $37.20, down 0.75%.

Mentioned in this article:

Coinbase Global, Inc. Nasdaq: COIN

DigitalOcean Inc. NYSE: DOCN

MP Materials Corp. Nasdaq: MP

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