ADR names gain as buyers return to the space; Snap convertibles top par; Innoviva active

By Abigail W. Adams

Portland, Me., March 22 – It was another slow day in the convertibles secondary space with the primary market dormant for more than one week.

There are whisperings about some wall-crossed deals in the works, sources said.

However, with markets still volatile, potential issuers may be waiting for more stability before launching offerings.

However, with equity markets notching another strong session, sources do expect to see some new paper before the week is through.

Equity indexes resumed their climb after a pullback on Monday with the Dow Jones industrial average closing the day up 254 points, or 0.74%, the S&P 500 index closing up 1.13%, the Nasdaq Composite closing up 1.95% and the Russell 2000 index closing up 0.99%.

While secondary activity remained muted, the market felt firmer with buyers retuning to the space, especially for the convertible notes of Asian-based companies, sources said.

Bilibili Inc.’s 0.5% convertible notes due 2026 and Sea Ltd.’s 0.25% convertible notes due 2026 continued to improve in active trading as their equities again surged.

While less active, Pinduoduo Inc.’s 0% convertible notes due 2025 also continued their upward momentum.

Snap Inc.’s 0.125% convertible notes due 2028 remained active with the notes topping par for the first time since early March.

The social media company’s equity-sensitive 0.75% convertible notes due 2026 also saw heavy volume with the notes gaining alongside stock.

Innoviva Inc.’s 2.125% convertible notes due 2028, one of the three convertible bond deals to price in March, were active early in the session although largely unchanged outright.

ADRs in focus

ADR names remained in focus on Tuesday with the equity of several convertible note issuers again surging after a sharp pullback on Monday.

Bilibili’s 0.5% convertible notes due 2026 were again on the rise as equity surged 20% after falling 9% the previous session.

The 0.5% notes gained about 2 points outright.

They were trading just shy of 76 with the yield about 6.5%, according to a market source.

Bilibili’s American Depositary Shares traded to a low of $26.94 and a high of $31.54 before closing the day at $29.90, an increase of 20.03%.

Sea’s 0.25% convertible notes due 2026 rose about 1 point outright with stock up 9%.

The 0.25% notes were changing hands at 79.75 in the mid-afternoon.

Sea’s ADS traded to a low of $115.22 and a high of $127.50 before closing the day at $124.58.

While less active, Pinduoduo’s 0% convertible notes due 2025 also continued to improve.

The 0% convertible notes traded up another 1 point to 88.375 by the late afternoon.

Pinduoduo’s ADS traded to a low of $41.85 and a high of $49.43 before closing the day at $47.53, an increase of 18.85%.

“Buyers are returning for the Asian paper,” a source said.

ADR names were among the outperformers in last week’s rally after bottoming out in a brutal sell-off the previous week.

Asian names were lifted following positive comments from Beijing pledging support to capital markets and overseas listings.

Investors were given reason to have renewed confidence in the space after Alibaba Group Holding Ltd. upped its share buyback program to $25 billion, leading to speculation that other Chinese tech firms will follow suit.

Shanghai-based e-commerce company Baozun Inc. also announced that it had repurchased $166.3 million of its 1.625% convertible notes due 2024.

While Sea is a Singapore-based internet company, they have traded in sympathy with China-based companies in the sell-off and rally of the past two weeks.

Snap tops par

Snap’s 0.125% convertible notes due 2028 topped par on Tuesday for the first time since early March.

The 0.125% notes rose 1.25 points outright with stock up about 3%.

The notes were changing hands at 100.25 in the late afternoon.

The convertibles improved about 0.25 point on a dollar-neutral basis, according to a market source.

Snap’s 0.75% convertible notes due 2022 were also active late in the session with the equity-sensitive notes climbing 3 points to 176.

Snap’s stock traded to a low of $34.97 and a high of $36.92 before closing the day at $36.24, an increase of 3.04%.

Innoviva eyed

Innoviva’s recently priced 2.125% convertible notes due 2028 saw some action during Tuesday’s session The notes were largely unchanged.

The notes were changing hands at 98.5 with stock flat at $18.77 about one hour after the opening bell.

However, after wavering between gains and losses Innoviva’s stock rallied into the close.

Stock traded to a low of $18.34 and a high of $19.10 before closing the day at $19.09, an increase of 3.02%.

Innoviva’s 2.125% convertible notes were one of three deals to price in March.

The biopharmaceutical company priced the $225 million issue at par on March 2.

Mentioned in this article:

Bilibili Inc. Nasdaq: BILI

Innoviva Inc. Nasdaq: INVA

Pinduoduo Inc. Nasdaq: PDD

Sea Ltd. NYSE: SE

Snap Inc. NYSE: SNAP

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