Morning Commentary: ‘Soft tape’ in convertibles space; Chegg convertibles still going strong

By Abigail W. Adams

Portland, Me., April 2 – Trading volume in the convertibles space was light early in Monday’s session with most industries down, according to a market source.

“Things are feeling pretty soft today,” the source said. “There’s not a lot of direction.”

With the Dow Jones industrial average down 0.70% early in Monday’s session, most names on the tape were weak.

However, Chegg Inc.’s recently priced 0.25% convertible notes due 2023 continued to go strong. The 0.25% convertible notes were seen trading around 102 with stock down 1.89%. “They’re still performing well,” a market source said.

Chegg priced $300 million of five-year convertible notes after the market close on Wednesday with a coupon of 0.25% and an initial conversion premium of 32.5%. The notes expanded about 1.75 points on their market debut Thursday.

With the end of the quarter and many companies in a black-out period, new issuances and trading volume in the convertible space is expected to be light for the next couple of weeks.

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