Novavax on deck; iQIYI convertible notes drop ‘like a stone’; Uniti, Wolfspeed lower

By Abigail W. Adams

Portland, Me., Dec. 14 – The convertibles primary market launched what many consider to be the last deal of the year on Wednesday.

Novavax Inc. plans to price $125 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 4.75% to 5.25% and an initial conversion premium of 22.5% to 27.5%, according to a market source.

J.P. Morgan Securities LLC (lead left), Jefferies LLC and Cowen Inc. are bookrunners for the Rule 144A offering, which carries a greenshoe of $18.75 million.

The new deal comes as the market digests the Federal Open Market Committee’s latest dot plot plan, which places the Federal Fund target rate on a 5% handle for 2023 and economic projections which included a reduction of the GDP to 0.5% growth in 2023 from the previous forecast of north of 1%.

Equity indexes launched the day strong but sank into the red following the Fed’s 2 p.m. ET announcement with the Dow Jones industrial average closing down 142 points, or 0.42%, the S&P 500 index down 0.61%, the Nasdaq Composite index down 0.76% and the Russell 2000 index down 0.65%.

There was $721 million in reported volume on Wednesday with one name dominating trading activity – iQIYI, Inc.

The Beijing-based online entertainment service provider’s convertible notes were “dropping like a stone” in heavy volume, a source said, although it was unclear what sparked the selling in the name.

Several recent deals continued to move lower on Wednesday.

Uniti Group Inc.’s recently priced 7.5% convertible notes due 2027 dropped to a 97-handle after brushing up against par the previous session.

Wolfspeed Inc.’s 1.875% convertible notes due 2029 sank further below par on a red day for the company’s stock.

iQIYI drops

iQIYI’s convertible notes were “dropping like a stone” in heavy volume, a source said, although it was unclear what sparked the selling in the name.

The 4% notes fell 5 points outright with the yield brushing against 50%.

The notes were changing hands in the 52.5 to 53 context throughout the session, a source said.

The yield was about 49%.

The notes were the most actively traded during Wednesday’s session with $28 million in reported volume.

The notes were previously trading at 58.

iQIYI’s 2% convertible notes due 2025 were holding in early trading with the notes unchanged at 81.75 about one hour into the session, a source said.

However, they also fell 5 points by the market close with the notes ending the day at 76.25 with a yield of 109%.

The yield was 78.5% at the market open.

There was $15 million in reported volume.

iQIYI has long been a yield play with the 2% notes due 2025 putable on April 1, 2023 and the 4% convertible notes due 2026 putable on Aug. 1, 2024.

However, iQIYI’s equity traded to a low of $3.42 and a high of $3.74 before closing the day at $3.63, a decrease of 5.71%.

Uniti down

Uniti’s recently priced 7.5% convertible notes due 2027 continued to weaken on Wednesday with the notes returning to a 97-handle after brushing up against par the previous session.

The 7.5% notes were down 2 points outright with stock off about 2%.

The notes closed Wednesday at 97.625 versus a stock price of $6.03.

There was $15 million in reported volume.

Uniti’s stock traded to a high of $6.28 and a low of $6.01 before closing the day at $6.04, a decrease of 2.27%.

Wolfspeed lower

Wolfspeed’s 1.875% convertible notes due 2029 sank further below par on Wednesday.

The notes were off about 1.25 points outright with stock down more than 2.5%.

They were changing hands at 98.5 versus a stock price of $81.34 at the close.

There was $12 million in reported volume.

Wolfspeed’s stock traded to a high of $84.46 and a low of $80.67 before closing the day at $81.22, a decrease of 2.64%.

After jumping as high as 104 their initial days in the aftermarket, the 1.875% convertible notes fell outright as stock turned red alongside broader equity markets.

The 1.875% convertible notes traded as low as 97 the previous week but rallied alongside equities to trade back up to par.

The notes were on a 99-handle heading into Wednesday’s session.

Mentioned in this article:

iQIYI, Inc. Nasdaq: IQ

Novavax Inc. Nasdaq: NVAX

Uniti Group Inc. Nasdaq: UNIT

Wolfspeed Inc. NYSE: WOLF

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.