Enovix convertibles break below par, hold dollar-neutral expansion; Rivian hits new low

By Abigail W. Adams

Portland, Me., April 20 – It was another quiet day in the convertibles secondary space on Thursday with the usual suspects dominating the tape as equities dipped on weak earnings and growing credit concerns.

The Dow Jones industrial average closed Thursday down 110 points, or 0.33%, the S&P 500 index closed down 0.60%, the Nasdaq Composite index closed off 0.80% and the Russell 2000 index closed down 0.72%.

Weak earnings from Tesla Inc. and warnings about deteriorating credit conditions from Federal Reserve officials dragged down markets on Thursday, which had been largely flat throughout the week as investors digested closely watched earnings reports.

While the broader market was weak, trading activity in the convertibles secondary space remained muted with $106 million in reported volume about one hour into the session and $550 million on the tape heading into the market close.

Investment-grade convertible issues continued to dominate the tape with Duke Energy Corp.’s 4.125% convertible notes due 2026 (Baa2/BBB) again the top traded issue in the market although with little movement in price.

JPMorgan Chase Financial Co. LLC’s 0.25% cash-settled equity-linked notes due May 1, 2023 (A1) tied to Voya Financial, Inc. were also active with their maturity days away.

Enovix Corp.’s 3% convertible notes due 2028, the sole new deal of the week, continued to give back the spectacular gains made on its aftermarket debut.

The notes broke below par during Thursday’s session, although they maintained a large dollar-neutral expansion.

EV makers continued to take a hit on Thursday as Tesla’s stock shed 10% in response to weak earnings.

Rivian Automotive Inc.’s 4.625% convertible notes due 2029 hit a new all-time low while Ford Motor Co.’s 0% convertible notes due 2026 (Ba2/BB+) fell further below par.

Investment-grade trades

The usual suspects dominated the tape on Thursday with Duke Energy’s 4.125% convertible notes due 2026 once again the top traded issue in the market.

While active, the 4.125% notes saw little price movement.

The notes were changing hands at 101.625 versus a stock price of $98.04 early in the session.

They were trading at 101.5 versus a stock price of $98.23 in the late afternoon.

There was $80 million in reported volume.

Duke’s stock traded to a low of $97.75 and a high of $98.83 before closing at $98.22, down 0.18%.

JPMorgan’s 0.25% cash-settled equity-linked notes due May 1, 2023 (A1) tied to Voya continued to see activity with their maturity days away.

The 0.25% notes were seen at 112.875 versus a stock price of $77.27 early in the session.

They traded just shy of 113 versus a stock price of $77.53 in the late afternoon.

There were three trades on the tape and $13 million in reported volume.

The notes were active due to end-of-life trades with holders punting their position as they prepare to be taken out, a source said.

Voya’s stock traded to a low of $76.60 and a high of $77.78 before closing at $77.23, off 0.45%.

Enovix breaks below par

While volume in the name was light, Enovix’s 3% convertible notes due 2028 continued to give back the spectacular gains made on their aftermarket debut on Tuesday.

The 3% notes broke below par on Thursday to trade as low as 97, a source said.

However, the notes fought back alongside stock to close Thursday wrapped around par.

While the notes have given back all outright gains made since hitting the secondary space, they have held onto a large dollar-neutral expansion.

The notes have expanded 3 points dollar-neutral since pricing, a source said.

Enovix’s stock traded to a low of $12.10 and a high of $12.74 before closing at $12.64, an increase of 0.40%.

Enovix, the sole new deal of the week, skyrocketed on its aftermarket debut on Tuesday with the notes trading as high as 107 and expanding as much as 4.5 points dollar-neutral.

Autos weaken

Thursday marked another weak session for automakers, particularly EV automakers, after disappointing earnings from Tesla.

General pressure in the sector and topical news drove Rivian’s 4.625% convertible notes due 2029 to a new all-time low on Thursday.

The 4.625% notes dropped another 2.5 points outright to a 91-hnadle.

They were marked at 91 bid, 91½ offered in the late afternoon.

The notes contracted another 0.25 point dollar-neutral after a 0.25 point dollar-neutral drop the previous session.

Rivian’s stock traded to a low of $12.02 and a high of $12.78 before closing at $12.35, a decrease of 3.67%.

In addition to general pressure on the sector, Rivian was dragged down by an analyst downgrade and price target cut.

Rivian also announced post-close on Wednesday that it had amended its credit agreement with JPMorgan to double its revolving commitments to $1.5 billion, increase its letter-of-credit sublimit to $1 billion from $500 million and extend its maturity to the earlier of April 19, 2028 or 91 days prior to the maturity of certain debt with more than $200 million outstanding.

Ford’s 0% convertible notes due 2026 continued to fall further below par and weaken dollar-neutral on Thursday.

The 0% notes sank another 2.5 points outright with stock off about 3%.

The notes traded down to 96 in light volume.

The paper continued to come in dollar-neutral, a source said.

Ford’s stock traded to a low of $11.55 and a high of $11.93 before closing at $11.87, a decrease of 2.86%.

Mentioned in this article:

Duke Energy Corp. NYSE: DUK

Enovix Corp. Nasdaq: ENVX

Ford Motor Co. NYSE: F

Rivian Automotive Inc. Nasdaq: RIVN

Voya Financial, Inc. NYSE: VOYA

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