Morning Commentary: Chesapeake Energy convertibles improve; Chegg active on earnings

By Abigail W. Adams

Portland, Me., Feb. 12 – The convertibles secondary space was active early in Tuesday’s session as equity markets started the day strong on optimism surrounding trade talks and lawmakers reaching a deal to avoid a government shutdown.

There was more than $109 million on the tape about one hour into Tuesday’s session.

With crude oil futures also spiking on Tuesday, Chesapeake Energy Corp.’s 5.5% convertible notes due 2026 were active with the notes improving on an outright basis.

The 5.5% convertible notes rose 1 point outright to 87.5, according to a market source. About $9.5 million of the bonds were on the tape early in the session.

After a steady downward spiral since the beginning of February, Chesapeake stock was showing signs of a rebound early Tuesday.

Stock was up to $2.44, an increase of 1.67%, shortly before 11 a.m. ET.

Chegg Inc.’s 0.25% convertible notes due 2023 were also active with the notes posting large gains on an outright basis as stock soared following an earnings beat.

The 0.25% notes rose about 10 points outright to 151.125, according to a market source. Chegg stock rose to $38.00, an increase of 9.2%, shortly before 11 a.m. ET.

Chegg beat on both the top and bottom lines in its fourth-quarter earnings report.

Chegg reported non-GAAP earnings per share of 25 cents versus analyst expectations for earnings per share of 21 cents.

Revenue was $95.7 million versus analyst expectations for revenue of $91.6 million.

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