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Carvana, Coinbase junk bonds fall on Wednesday as layoffs and losses hit prices

Layoffs and losses in a tight job market?

Debt Instruments issued by Carvana Co. CVNA,
-18.21%
and Coinbase Global Inc. COIN,
-26.40%
tumbled in the U.S. high yield market on Wednesday after both companies described setbacks following a pandemic boom.

The slide comes a day after Carvana, an online auto dealership known for its auto vending machines, announced it would lay off about 2,500 workers, or about 15% of its workforce, weeks after posting a $506 million loss in the first quarter had reported.

The layoffs come a week after Federal Reserve Chair Jerome Powell pointed to a historically tight job market as the central bank seeks to secure a soft landing for the economy by cooling inflation without triggering a recession.

Carvana was the most actively traded bond in the U.S. “junk bond” market on Wednesday, after outlining its plans for redundancies, followed by Bausch Health Americas Inc. BHC,
+7.77%
and Coinbase, according to BondCliq data.

The largest trading saw Carvana’s CCC-rated 10.25% coupon bonds maturing in May 2030, with prices falling to $84.94 from around $99 a week ago. Bond prices move in the opposite direction as yields.

Coinbase reported gains on Tuesday, announcing it turned loss and down 2.2 million crypto traders as Bitcoin BTCUSD prices,
+2.13%,
Ethereum ETHUSD,
+2.70%
and other crypto assets plunged from last year’s highs.

Its longest BB+ rated bonds, maturing in October 2031, with a coupon of 3.625%, fetched prices of $66 on Wednesday compared to $75.50 the week before.

Fixed income investors have had a brutal start to 2022, driven by interest rate volatility linked to the Federal Reserve’s efforts to stem high inflation by raising interest rates and trimming its nearly $9 trillion balance sheet.

Returns in the ICE BofA US Corporate Index were ldetected at 7.4%up from pandemic lows near 4%, sparking record debt boom.

Shares of Carvana are down about 87.1% year-to-date on Wednesday, while Coinbase is down 78.7%, according to FactSet. Coinbase declined to comment. A request for comment to Carvana was not immediately answered.

https://www.marketwatch.com/story/carvana-coinbase-junk-bonds-tumble-wednesday-as-layoffs-losses-hit-prices-11652309392?rss=1&siteid=rss Carvana, Coinbase junk bonds fall on Wednesday as layoffs and losses hit prices

Brian Lowry

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