Rivian gains continue; Wolfspeed jumps on supply agreement; Air Transport notes active

By Abigail W. Adams

Portland, Me., July 5 – The convertibles secondary space saw an active start to the first full trading day of the third quarter with topical news moving the market on a soft day for equities.

Equity indexes were mixed at the open but dipped into negative territory by the close with the release of the Federal Open Market Committee minute notes increasing odds for a rate increase in July.

The Dow Jones industrial average closed Wednesday down 130 points, or 0.38%, the S&P 500 index closed down 0.20%, the Nasdaq Composite index closed down 0.18% and the Russell 2000 index closed down 1.04%.

While a soft day for equities, several convertible issuers saw large movements as topical news drove stock higher.

Rivian Automotive Inc.’s 4.625% convertible notes due 2029 continued to climb to new outright highs with stock adding to the blockbuster gains of the previous session.

Wolfspeed Inc.’s convertible notes saw outsized moves to the upside early Wednesday after the company announced a new supply agreement that secured up to $2 billion in liquidity for the company.

Air Transport Services Group, Inc.’s short-duration 1.125% convertible notes due Oct. 15, 2024, an off-the-run issue that rarely trades in volume, was among the top traders of Wednesday’s session, although with little movement in price.

MicroStrategy Inc.’s 0.75% convertible notes due 2025 also rocketed higher alongside stock with Bitcoin trading near its 52-week high.

Rivian’s uptrend

Rivian’s 4.625% convertible notes due 2029 continued their strong uptrend on Wednesday with the notes continuing to gain outright as stock added to the blockbuster gains of the previous week.

The 4.625% notes were up another 1.75 points outright in heavy volume.

The notes were changing hands at 126.125 versus a stock price of $19.75 early in the session, according to a market source.

They continued to trade at 126.125 in the late afternoon.

There was $20 million in reported volume.

Rivian’s stock traded to a low of $19.44 and a high of $21.05 before closing at $20.43, up 4.45%.

Rivian’s 4.625% notes have climbed more than 27 points over the past week with stock jumping more than 40%.

Stock was propelled higher by double digits on Friday following better-than-expected vehicle delivery numbers.

The notes opened the previous week on a 96-handle.

Wolfspeed supply agreement

Wolfspeed’s convertible notes saw outsized moves to the upside on Wednesday after the company announced a new supply agreement that secured up to $2 billion in liquidity for the company.

Wolfspeed’s 1.875% convertible notes due 2029 climbed 7 points outright with stock up more than 13%.

The 1.875% convertible notes were changing hands at 84.875 versus a stock price of $63.51 early in the session, according to a market source.

They were trading at 84.375 versus a stock price of $63.29 in the late afternoon.

There was $12 million in reported volume.

Wolfspeed’s 0.25% convertible notes due 2028 climbed 5 points outright.

The notes were trading at 82.5 versus a stock price of $63.90 early in the session and 82.25 versus a stock price of $64.20 in the late afternoon.

There was $5 million in reported volume.

Wolfspeed’s stock traded to a low of $62.95 and a high of $69.63 before closing at $62.99, an increase of 11.02%.

Wolfspeed’s stock was among the top performers early in Wednesday’s session after the company announced a supply agreement with Renesas.

Renesas agreed to deposit $2 billion with Wolfspeed to secure a 10-year supply of silicon carbide wafers.

Renesas will deposit an initial $1 billion with Wolfspeed with Wolfspeed given the option to request additional deposits of up to $1 billion in 2024.

The deposits will bear interest of 6%, which will be stepped up to either 10% or 15% if the company has a supply shortage and can be prepaid at 106, according to an 8-K filing with the Securities and Exchange Commission.

The agreement matures on July 5, 2033.

Air Transport active

Air Transport’s short-duration 1.125% convertible notes due Oct. 15, 2024, a small, illiquid issue that rarely trades in volume, was among the most actively traded names during Wednesday’s session.

The 1.125% notes were little changed dollar-price.

They continued to trade on a 94-handle and were seen trading at 94.75 versus a stock price of $19.15 in the late afternoon, according to a market source.

The yield was 5.43%.

There was $20 million in reported volume.

Air Transport’s stock traded to a low of $18.78 and a high of $19.30 before closing at $19.06, off 0.94%.

MicroStrategy higher

MicroStrategy’s 0.75% convertible notes due 2025 rocketed higher alongside stock as Bitcoin traded near the 52-week high reached the previous session.

The 0.75% convertible notes jumped 7 points outright.

They were trading at 116.25 versus a stock price of $378.89 in the late afternoon, according to a market source.

There was $8 million in reported volume.

MicroStrategy’s stock traded to a low of $359.10 and a high of $382.99 before closing at $378.11, an increase of 0.071%.

While gains were limited on Wednesday, stock has added more than 11% since Monday with Bitcoin on a bull run.

Bitcoin traded up to a 52-week high of $31,389 on Tuesday before softening slightly to $30,448.92, a decrease of 0.96%, shortly after the close of U.S. equity markets.

Bitcoin has been on a strong uptrend over the past two sessions as a wave of institutional investors refiled applications for spot Bitcoin ETFs, which the Securities and Exchange Commission previously said were not comprehensive.

Mentioned in this article:

Air Transport Services Group, Inc. Nasdaq: ATSG

MicroStrategy Inc. Nasdaq: MSTR

Rivian Automotive Inc. Nasdaq: RIVN

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.