Twitter leads trading; Akamai active; Caesars expands; Deutsche, Aegean Marine lower

By Abigail W. Adams

Portland, Me., June 5 – The convertibles space was again quiet on Tuesday with all eyes on the primary market to see what the week will bring for new deals.

“The looming question is will we see decent issuance,” a market source said.

With no new deals launched on Tuesday, sources were doubtful the anticipated uptick in new deal activity would come to pass.

While the overall market was quiet, there was a notable increase in trading volume from Monday with more than $424.5 million in trading volume by late afternoon.

Twitter Inc.’s 1% convertible notes due 2021 were major volume movers during Tuesday’s session with the notes up outright as stock broke out to a new 52-week high.

Akamai Technologies Inc.’s 0.125% convertible notes due 2025 were again active in the secondary space as stock also broke out to a new 52-week high.

While the notes were up on an outright basis, they were largely unchanged dollar neutral, a market source said.

Caesars Entertainment Corp.’s 5% convertible notes due 2024 were also active on an otherwise quiet day amid speculation there would be a potential buyback of the notes.

They were seen expanded about 1.5 points dollar neutral, a source said.

Deutsche Bank AG, London Branch’s cash-settled equity-linked notes tied to Voya Financial Inc. also saw some trading action on Tuesday with the notes now trading in the 95 range after a steady drop from last week.

While not active, Aegean Marine Petroleum Network Inc.’s convertible notes were quoted significantly lower as the company’s stock tanked after news broke about accounting errors in the company’s 2017 year-end report.

Twitter leads volume

Twitter’s 1% convertible notes were a volume leader on Tuesday as stock broke out to a new 52-week high.

The notes were up about 1 point outright to trade up to 95.875, a market source said. They were later seen trading at 95.85 versus a stock price of $39.77.

While Twitter’s 1% notes saw high-volume trading activity with more than $22 million on the tape by late afternoon, the 0.25% notes due 2019 were not active.

The 0.25% notes have a much lower delta than the 1% notes and “don’t really nuke,” a market source said.

While not active, the 0.25% notes did trade just south of 97 in scattered activity.

Twitter stock jumped on Tuesday on news the social networking site will join the S&P 500.

Stock closed Tuesday at $39.80, an increase of 5.07%. Twitter’s previous 52-week high was $37.98.

Akamai holds

Akamai’s 0.125% convertible notes due 2025 were again a major volume mover in the secondary space with about $20 million of the bonds on the tape by late afternoon. The notes were up about 2 points outright as Akamai stock reached a new 52-week high.

The convertibles were seen trading at 104.625 versus an equity price of $79.15. The 0.125% convertible notes were largely unchanged dollar neutral, a market source said.

“Their premium is holding,” a market source said.

The 0.125% notes have expanded about 1.25 points to 1.5 points since they hit the market on May 17, a market source said.

Caesar expands

Caesar Entertainment’s 5% convertible notes due 2024 were expanding dollar neutral in high-volume trading on Tuesday.

The 5% convertible notes were volatile with outright trades as low as 181 and as high as 186 as stock traded to a low of $11.55 and a high of $12.15 before closing the day at $11.70, a decrease of 2.5%.

They were seen trading at 182.4 versus a stock price of $11.65 in the mid-afternoon with about $16 million of the bonds on the tape. The notes were seen up 1.5 points on a dollar-neutral basis, a market source said.

Deutsche’s credit problems

Deutsche’s 1% cash-settled equity-linked notes tied to Voya Financial due 2023 were also among the volume leaders of Tuesday’s session.

The notes were seen trading in the 95 range with about $20 million of the bonds on the tape, according to market sources.

They were seen trading at 95.4 versus an equity price of $52.77.

Deutsche’s 1% notes traded above par as recently as May 21 but have been on a steady decline since last week as a result of the bank’s credit downgrade, a market source said.

S&P lowered its long-term issuer credit ratings on Deutsche Bank AG to BB+ from A- on June 1.

The downgrade was the result of a deeper-than-anticipated restructuring of the bank’s business model in its updated strategy, S&P said in a news release.

Deutsche’s division in the United States has been under regulatory scrutiny with the division labeled in a troubled condition by the Federal Reserve one year ago and Deutsche Bank’s FDIC-insured subsidiary added to the FDIC’s list of banks at risk of failure, the Wall Street Journal reported on May 31.

As Deutsche’s 1% notes saw heavy trading volume, so too did JPMorgan Chase Financial Co. LLC’s most recently priced 0.25% cash-settled equity-linked notes tied to Voya Financial.

The 0.25% notes were seen trading up to 100.5. While more than $15 million of the bonds traded, they were done in large blocks with only four trades on the tape, according to a market source.

Aegean tanks

As Twitter and Akamai stock broke out to new 52-week highs on Tuesday, Aegean set a new 52-week low.

While Aegean’s bonds did not see much trading action, they were both quoted 30 to 40 points lower.

Aegean’s 4.25% convertible notes due 2021 were quoted at 30 bid, 40 offered, a market source said. They were last seen trading in early May at 71.

Aegean’s 4% convertible notes due Nov. 1, 2018 were quoted at 50 bid, 60 offered, the source said.

In scattered activity, the 4% notes traded on Tuesday at 52.5 after trading on Monday at 96, according to Trace data.

Aegean stock bottomed out on Tuesday after an audit of the company’s 2017 year-end report revealed $200 million of accounts receivable that will need to be written off.

Stock closed Tuesday at a new 52-week low of 70 cents, a decrease of 75.44%.

The 52-week low was previously $1.75.

There may also be other adjustments stemming from the audit, which could impact Aegean’s financial statements, the company said in a press release.

Mentioned in this article:

Aegean Marine Petroleum Network Inc. NYSE: ANW

Akamai Technologies Inc. Nasdaq: AKAM

Caesars Entertainment Corp. Nasdaq: CZR

Twitter Inc. NYSE: TWTR

Voya Financial Inc. NYSE: VOYA

© 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.