PDD Holdings convertibles gain on earnings; Coinbase rebounds; LivaNova shoots higher

By Abigail W. Adams

Portland, Me., March 20 – The convertibles primary market remained idle on Wednesday as markets processed the Federal Open Market Committee’s afternoon announcement and Federal Reserve chair Jerome Powell’s press conference.

Equity and Treasury markets whipsawed in their initial reaction to the rate forecast, which left the projections for three rate cuts in 2024 unchanged but downwardly revised the rate cuts expected in 2025.

However, the market response was ultimately positive with equity indexes surging into the close and Treasury yields ticking lower.

The Dow Jones industrial average closed Wednesday up 401 points, or 1.03%, the S&P 500 index closed up 0.89%, the Nasdaq Composite index closed up 1.25% and the Russell 2000 index closed up 1.92%.

There convertibles secondary space was active in the run-up to and in the aftermath of the announcement with $96 million in reported convertibles trading volume about one hour into the session and $622 million on the tape in the late afternoon.

While broader markets were laser focused on the Fed, topical and earnings-related news was driving the activity and the price moves in the space.

PDD Holdings Inc.’s (formerly known as Pinduoduo Inc.) 0% convertible notes due 2025 made strong gains on an outright and dollar-neutral basis after an earnings beat.

LivaNova plc’s recently priced 2.5% convertible notes due 2029 shot higher outright and gained dollar-neutral as stock popped on positive results from a clinical trial.

Coinbase Global Inc.’s 0.25% convertible notes due 2030 rebounded alongside stock after hitting a new low the previous session with the recently priced notes closing the day well above par.

PDD’s earnings

PDD Holdings’ 0% convertible notes due 2025 were in focus on Wednesday with the notes making strong outright and dollar-neutral gains on the heels of an earnings beat.

The 0% convertible notes added 2 points outright with equity up as much as 5% in intraday trade.

The notes were trading at 100.25 versus an equity price of $135.46 early in the session, according to a market source.

They were trading at 100.375 in the late afternoon.

The notes expanded about 0.5 point dollar-neutral.

There was $22 million in reported volume with the notes among the top traders of the session.

The Shanghai-based e-commerce company’s American Depositary Shares were volatile during Wednesday’s session and made large gains at the open before giving most back to trade unchanged mid-session only to regain some upward momentum into the close.

The ADSs traded as high as $148.30 and as low as $127.64 before closing at $132.17, up 3.52%.

PDD was in focus after the company reported a large earnings beat with earnings per share of $17.32 versus analyst expectations for earnings of $11.89.

Revenue was $88.88 billion versus the expected $78.05 billion.

PDD Holdings’ 0% convertible notes due 2025 were among the comeback kings of 2023 with the notes exploding from busted territory to a balanced profile.

While the notes were putable in December 2023, few exercised the option with a substantial portion of the issue remaining outstanding.

LivaNova gains

LivaNova’s recently priced 2.5% convertible notes due 2029 shot higher outright and gained dollar-neutral as stock popped on positive clinical results for a sleep apnea treatment.

The 2.5% convertible notes added 5 points outright with stock up more than 12% during Wednesday’s session.

The notes were trading at 105.375 versus a stock price of $55.09 in the late afternoon.

They expanded about 0.5 point dollar-neutral, a source said.

LivaNova’s stock traded to a low of $51.22 and a high of $57.18 before closing at $56.63, up 12.50%.

The medical device company’s stock popped after it announced positive clinical results for a nerve stimulator system for sleep apnea.

Coinbase rebounds

Coinbase’s 0.25% convertible notes due 2030 rebounded outright after hitting a new low the previous session with the recently priced notes closing the session above par.

The 0.25% notes added 4.5 points outright with stock up more than 10%.

They were trading at 101.125 versus a stock price of $248 in the late afternoon.

There was $21 million in reported volume.

Coinbase’s 0.5% convertible notes due 2026 were also on the rise with the notes up 3 points outright to trade at 107 in the late afternoon.

While Coinbase’s notes have been volatile alongside stock on an outright basis, they were largely trading in line dollar-neutral.

Coinbase’s stock traded to a low of $228.30 and a high of $256.96 before closing at $256.88, up 11.63%.

Stock was again on the rise as Bitcoin resumed its upward momentum with the crypto-currency trading at $65,937, an increase of 2.15%, shortly after the close of U.S. markets.

Mentioned in this article:

Coinbase Global, Inc. Nasdaq: COIN

LivaNova USA Inc. Nasdaq: LIVN

PDD Holdings Inc. Nasdaq: PDD

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