Convertibles secondary trading light; Nio gains post-earnings; Tesla up; IAC active

By Abigail W. Adams

Portland, Me., May 28 – The convertibles primary market was quiet and the secondary space was slow in the return from the Memorial Day holiday weekend.

There was about $80 million in trading volume early in Tuesday’s session and $292 million in reported volume by the late afternoon.

IAC/InterActive Corp.’s newly priced convertible notes were active in the secondary space with both tranches posting gains as their potential addition to the Thomson Reuters Convertible Indices is under review.

Tesla Inc.’s recently priced 2% convertible notes due 2024 were again among the most actively traded names in the secondary space with the notes improving dollar-neutral.

Nio Inc.’s 4.5% convertible notes due 2024 were also making gains on both an outright and dollar-neutral basis on Tuesday after a better-than-expected earnings report.

Nutanix Inc.’s 0% convertible notes due 2023 dropped below par on Tuesday as stock tanked following an analyst downgrade.

IAC in focus

IAC’s newly priced tranches were active on Tuesday with both making gains on an outright and dollar-neutral basis.

The 0.875% convertible notes due 2026 were changing hands just shy of 101 on an outright basis. They were improved about 0.5 point dollar-neutral, a market source said.

IAC’s 2% convertible notes due 2030 traded as high as 102 by the mid-afternoon.

They were improved about 0.75 point dollar-neutral, a market source said.

The notes were among the major volume movers in the secondary space with $11 million and $13 million on the tape, respectively.

IAC’s stock traded up to $227.69 on Tuesday before closing the day at $224.74, an increase of 0.83%.

While the notes have made steady gains on a dollar-neutral basis since hitting the secondary space on May 22, they struggled outright as stock sank amid market volatility last week.

However, both tranches closed out last week above par as stock rebounded.

Tesla up on swap

Tesla’s 2% convertible notes due 2024 were again among the most actively traded issues in the secondary space.

The notes were changing hands around 87.875 throughout Tuesday’s session.

They were improved about 0.5 point dollar-neutral, a market source said.

Tesla stock was again volatile on Tuesday.

Stock traded to a high of $195.00 early in the session and a low of $188.02 before closing the day at $188.70, a decrease of 1.01%.

More than $12 million of the notes were on the tape by Tuesday afternoon.

While Tesla’s 2% convertible notes were active on Tuesday, the electric car manufacturer’s other tranches of convertible notes were slow to trade.

The 2% notes have seen a steady contraction over the past two weeks as Tesla stock got hammered.

However, the notes reversed course and regained their footing on a dollar-neutral basis late last week with the notes recouping their previous losses.

Nio improves

Nio’s 4.5% convertible notes due 2024 were making gains on an outright and dollar-neutral basis on Tuesday after better-than-expected earnings.

After trading as low as 66 on Friday, the 4.5% notes gained about 4 points outright to trade as high as 70 Tuesday afternoon.

The notes were expanded about 1 point dollar-neutral, a market source said.

Nio’s ADSs traded as high as $4.14 before closing the day at $3.975, an increase of 2.98%.

The Shanghai-based electric car manufacturer, which some sources refer to as the Tesla of China, posted better-than-expected first-quarter earnings.

Nio reported revenue of $243 million, which beat expectations for revenue of $229 million.

The adjusted net loss of $373 million was also less than the $472 million loss analysts had expected, Businessinsider.com reported.

Nio’s ADSs were $7.46 when the convertible notes priced in late January.

However, the company’s shares and its convertible notes have taken a hit as investor confidence in the company has withered.

The notes were steadily trading down throughout last week in anticipation of the company’s earnings report.

Nutanix drops

Nutanix’s 0% convertible notes due 2023 dropped below par on Tuesday as stock tanked following an analyst downgrade.

The 0% notes were quoted down 4.5 points outright to close the day at 99.75, according to a market source.

More than $7 million of the bonds were on the tape by the late afternoon.

Nutanix stock closed Tuesday at $31.41, a decrease of 10.61%.

Stock sank after Morgan Stanley analysts downgraded the stock to “equal weight” from “overweight” and lowered their price target to $37.00 from $53.00.

The downgrade was due to increased competition from Dell Technologies and came ahead of the cloud computing software company’s third-quarter earnings report which is expected after the market close on Thursday.

Mentioned in this article:

IAC/InterActive Corp. Nasdaq: IAC

Nio Inc. NYSE: NIO

Nutanix Inc. Nasdaq: NTNX

Tesla Inc. Nasdaq: TSLA

© 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.