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Morning Commentary: Southwest Airlines convertibles active; SoFi falls post-earnings
By Abigail W. Adams
Portland, Me., April 29 – The convertibles primary market was dormant and the secondary space quiet early Monday with equity indexes in the green as markets stare down the Federal Open Market Committee set to convene on Tuesday.
The Dow Jones industrial average was up 66 points, or 0.17%, the S&P 500 index was up 0.29%, the Nasdaq Composite index was up 0.37% and the Russell 2000 index was up 0.76% shortly before 11 a.m. ET.
There was $64 million in reported volume about one hour into the session with high-grade names and earnings-related news continuing to drive activity.
Southwest Airlines Co.’s 1.25% convertible notes due May 1, 2025 (Baa1/BBB) were dragged lower in heavy volume after falling last Friday on disappointing earnings.
The 1.25% notes were trading at 98.75 versus a stock price of $26.62 early in the session, according to a market source.
There was $10 million in reported volume.
Southwest’s stock was trading at $26.49, a decrease of 2%, shortly before 11 a.m. ET.
While volume was light early in the session, SoFi Technologies Inc.’s 1.25% convertible notes due 2029 sank alongside stock after reporting earnings.
The 1.25% notes were down 5.5 points outright with stock off more than 9%.
The notes were trading at 96.75 versus a stock price of $7.16 early in the session, according to a market source.
SoFi’s stock was trading at $7.12, a decrease of 9.55%, shortly before 11 a.m. ET.
While the fintech company posted a large earnings beat, disappointing guidance triggered a sell-off in stock.
SoFi reported earnings per share of 3 cents versus the breakeven expected. Revenue was $581 million versus analyst expectations for revenue of $560 million.
However, SoFi’s second-quarter revenue forecasts of $555 million to $565 million fell well short of analyst expectations for revenue of $580 million.
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