Rivian convertible notes shoot to new heights; Wolfspeed up outright, flat on swap

By Abigail W. Adams

Portland, Me., July 7 – It was a quiet yet firm day in the secondary space on Friday as the heavy selling of the previous day ceased following the U.S. nonfarm payrolls report, which reflected some softening in the labor market.

Equity indexes were mixed at the open, popped into positive territory mid-session, but were dragged lower late in the session and ended the day mixed.

Markets were digesting a confusing picture of the labor market presented in recent reports with the nonfarm payrolls report coming in below expectations while wage growth remained strong.

The report follows the blockbuster ADP employment report that blew past expectations for job gains and sparked heavy selling on Thursday.

“It’s like yesterday never happened,” a source said.

The Dow Jones industrial average closed Friday down 187 points, or 0.55%, the S&P 500 index closed down 0.29%, the Nasdaq Composite index closed down 0.13% and the Russell 2000 index closed up 1.22%.

While markets were firmly focused on macro data, topical news was the driver of trading activity on Friday.

There was $47 million in reported convertibles trading volume about one hour into the session and $314 million in reported volume about one hour before the market close.

Rivian Automotive Inc.’s 4.625% convertible notes due 2029 dominated the tape as the notes continued to rocket to new outright heights and add dollar-neutral.

Wolfspeed Inc.’s convertible notes also continued to gain outright although the notes fell flat on swap as stock added to the strong gains made over the past week.

Rivian rockets higher

Rivian’s 4.625% notes continued to shoot to new outright heights and expand dollar-neutral as the stock’s strong upward momentum continued.

The notes were changing hands at 142.375 versus a stock price of $23.72 early in the session, according to a market source.

They traded as high as 150 and were marked at 148 versus a stock price of $24.89 in the late afternoon.

The notes added another 0.5 point dollar-neutral on the move up, a source said.

There was $35 million in reported volume with the notes the most actively traded during Friday’s session.

Rivian’s stock traded to a low of $22.60 and a high of $25.63 before closing at $24.70, an increase of 14.25%.

Stock continued to rocket higher on Friday with a bullish analyst call further fueling the stock’s upward momentum.

Rivian’s stock has gained almost 50% over the past week after the company’s deliveries blew past expectations.

The 4.625% convertible notes have gained more than 50 points outright since the last week of June.

The notes move on a heavy hedge of about 90%.

They have gained 4 to 4.5 points dollar-neutral over the past week, a source said.

Wolfspeed rises

Wolfspeed’s convertible notes were again on the rise as stock added to the strong gains made following a new supply agreement that provided the company with up to $2 billion in liquidity.

The semiconductor company’s 1.875% convertible notes due 2029 gained 3 points outright with stock up more than 8%.

The 1.875% notes were seen at 84.75 versus a stock price of $64.57 in the late afternoon.

There was $7 million in reported volume.

The 0.25% convertible notes due 2028 gained 1.5 points outright.

The notes were changing hands at 83 versus a stock price of $64.56 in the late afternoon.

There was $6 million in reported volume.

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

Wolfspeed’s stock traded to a low of $59.88 and a high of $65.27 before closing at $63.64, an increase of 8.01%.

Stock has gained more than 15% over the past week after Wolfspeed announced a new supply agreement with Renesas.

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

Mentioned in this article:

Rivian Automotive Inc. Nasdaq: RIVN

Wolfspeed Inc. NYSE: WOLF

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