Long weekend, vacations weigh on convertibles market; pipeline quiet; Vipshop improves

By Stephanie N. Rotondo

Phoenix, Feb. 17 – The long holiday weekend and a school vacation on the U.S. East Coast was weighing on activity in the convertibles market on Tuesday, according to a trader.

“A lot of people are on vacation,” he said.

“There was no real trend,” another trader said, adding that “we definitely had a chunk of clients that were out.”

Additionally, the first trader said there was “not even any rumblings” of new issues slated for the shortened week.

He speculated that there could be a deal by Thursday, providing it was one with a quick marketing. Barring that, he opined that the primary pipeline would be muted until Monday.

The second trader said there had not been any chatter for the current week but that there could be something coming next week.

Vipshop pops on earnings

Vipshop Holdings Ltd. reported remarkable earnings on Tuesday, pushing its 1.5% convertible notes due 2019 up 9 to 10 points on the day.

At one desk, a trader placed the issue around 136. Another market source saw the paper hitting highs around 137.5.

The equity underlying the bonds meantime popped $3.31, or 15.18%, to $25.11.

For the fourth quarter of 2014, the China-based online discount retailer posted total net revenue of $1.36 billion, up nearly 109% year over year.

The company attributed the massive increase to a 114.2% gain in active customers and a 99.6% increase in total orders.

Net income rose to $56.6 million, a 122.8% gain from the previous year.

Gross margin also improved to 24.9% from 24.5%.

At the end of the quarter, cash and equivalents equaled $772.2 million.

Net cash from operations was $311.2 million.

Looking to the first quarter of 2015, the company said it was expecting total net revenue of $1.25 billion to $1.3 billion, which would be a 78% to 85% gain from the previous year.

Mentioned in this article:

VipShop Holdings Ltd. NYSE: VIPS

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