Wolfspeed convertible notes jump post-earnings; Sunnova holds gains; BlackLine active

By Abigail W. Adams

Portland, Me., Aug. 18 – The convertibles primary market stood poised for a quiet end to the week after pricing $1.125 billion over two deals.

While refinancing transactions remain the primary driver of new deal activity, there were also some opportunistic capital raises after the rally in credit and equity markets over the past three weeks.

If markets hold, sources expect to see more new paper in the coming week with buyside demand strong, especially given the strong secondary market performance of recent deals, sources said.

Meanwhile, it was a relatively quiet day in the convertibles secondary space as trading activity in new paper tempered.

Equity indexes again wobbled between positive and negative territory before ending the day with nominal gains.

The Dow Jones industrial average closed Thursday up 19 points, or 0.06%, the S&P 500 index closed up 0.23%, the Nasdaq Composite index closed up 0.21% and the Russell 2000 index closed up 0.68%.

There was $100 million in reported volume about one hour into the session and $463 million in reported volume about one hour before the market close.

Sunnova Energy International Inc.’s 2.625% convertible notes due 2028 remained active although with little movement in price.

However, Wolfspeed Inc. was the name of the day with its convertible notes surging alongside stock after a surprise earnings beat.

BlackLine Inc.’s 0% convertible notes due 2026 also continued to see heavy volume although with little movement in price.

Sunnova holds

Sunnova’s 2.625% convertible notes due 2028 remained active their second day in the secondary space although with little movement in price.

The 2.625% convertible notes remained on a par handle.

They were changing hands at 100.125 versus a stock price of $25.49 in the late afternoon.

The notes were unchanged dollar-neutral, a source said.

There was $20 million in reported volume.

Sunnova’s stock traded to a low of $25.14 and a high of $26.19 before closing the day at $25.53, an increase of 0.63%.

While the notes continued to trade at par, they held onto their large dollar-neutral gains.

The 2.625% convertible notes expanded 2 to 2.5 points during Wednesday’s session.

Wolfspeed in focus

Wolfspeed was the name of the day on Thursday with the semiconductor parts manufacturer’s convertible notes surging alongside stock after a surprise earnings beat.

Wolfspeed’s 0.25% convertible notes due 2028 were the most actively traded issue during Thursday’s session as the notes shot past par for the first time since May.

The 0.25% notes traded up 17 points outright with stock up more than 30%.

The notes were changing hands at 110.375 versus a stock price of $108.11 early in the session.

They climbed to 113.5 versus a stock price of $111.48 in the late afternoon.

The notes expanded 2 to 3.5 points dollar-neutral on the move up, a source said.

There was $29 million in reported volume.

Wolfspeed’s deep-in-the-money 1.75% convertible notes due 2026 surged above double par.

The notes rose 40 points to trade at 239 in the late afternoon.

There was $9 million in reported volume.

Wolfspeed’s stock traded to a low of $103.58 and a high of $113.72 before closing the day at $112.91, an increase of 31.83%.

Wolfspeed’s stock was among the best performers in equity markets on Thursday after the company reported a large earnings beat.

Wolfspeed announced earnings per share of 2 cents versus analyst expectations for a loss of 10 cents.

Revenue was $228.5 million versus analyst expectations for revenue of $207.81.

BlackLine active

BlackLine’s 0% convertible notes due 2026 continued to see heavy volume although with little movement in price.

The 0% notes remained on an 86-handle as stock pulled back after surging the previous session.

The notes were wrapped around 86.5 in the late afternoon.

There was $12 million in reported volume.

BlackLine’s stock traded to a high of $74.41 and a low of $71.71 before closing the day at $73.80, a decrease of 0.74%.

While stock pulled back on Thursday, it is up more than 7% on the week with the majority of gains made during Wednesday’s session.

Mentioned in this article:

BlackLine Inc. Nasdaq: BL

Sunnova Energy International Inc. NYSE: NOVA

Wolfspeed Inc. NYSE: WOLF

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