Convertibles trading light; GSD expansion continues; Workday active; AXA, Akamai gain

By Abigail W. Adams

Portland, Me., June 1 – The convertibles space ended the week on a quiet note with trading volume light in the secondary space after a slow week for the primary market where one new deal priced.

While the flurry of activity surrounding new paper from GDS Holdings Ltd. died down, the new 2% convertible notes due 2025 continued to improve on a dollar-neutral basis.

Workday Inc.’s 0.25% convertible notes due 2022 were a volume leader on Friday with the notes expanding slightly dollar-neutral as they traded down outright, a market source said.

Intel Corp.’s 3.25% convertible notes due 2039 and Teradyne Inc.’s 1.25% convertible notes due 2023 both saw large block trades on Friday although the notes were largely moving in line with stock.

AXA SA’s 7.25% mandatorily exchangeable bonds for AXA Equitable Holdings, Inc. stock recouped most of their losses from Tuesday and almost returned to their previous outright price on Friday.

GDS day two

After dominating trading activity on their market debut on Thursday with more than $86 million bonds in play, GDS Holdings’ 2% notes did not see much trading activity on Friday.

However, they continued to make gains on an outright and dollar-neutral basis.

The 2% convertible notes were quoted at 101 bid, 101¾ offered early in the session and were seen trading into the bid at 101, a market source said.

The 2% notes were largely wrapped around 101 for the remainder of the session, a market source said.

They were moving up 0.25 point to 0.5 point dollar neutral after a 0.75-point expansion on their market debut on Thursday, the source said.

GDS Holdings’ American Depositary Shares closed Friday at $37.55, a decrease of 0.69%.

Workday leads Friday

Workday’s 0.25% notes due 2022 were a volume leader on Friday.

The notes were expanding slightly dollar neutral as company stock dropped after the financial and human capital software vendor released its first-quarter earnings report after the market close on Thursday.

The 0.25% notes were down between 1.5 points and 2 points on an outright basis.

The notes were seen trading at 108.2 versus an equity price of $125.97 in the late afternoon. They were seen expanded about 0.25 point dollar neutral, a market source said.

While Workday topped analyst expectations with non-GAAP earning per share of 33 cents, compared to the expected earnings per share of 26 cents, Workday stock was down more than 4% in intraday trading.

Workday stock closed Friday at $126.29, a decrease of 3.57%.

Large block trades

Intel’s 3.25% convertible notes due 2039 and Teradyne’s 1.25% convertible notes due 2023 both saw heavy trading volume by dollar amount due to some large block trades on Friday.

Teradyne’s 1.25% convertible notes were up about 2.75 points on an outright basis. They were seen trading at 136 versus an equity price of $38.83 in the late afternoon.

There were multiple buyers for a large block of bonds one seller put on the table, a market source said. About $10 million of the bonds had traded by late afternoon.

The notes were moving largely in line dollar neutral, the source said.

Intel’s 3.25% notes also saw heavy trading volume by dollar amount on Friday although with few trades on the tape.

The notes were seen trading at 266.5 versus an equity price of $55.75 with two $5 million prints on the tape, according to a market source.

The notes move on a 100% delta and move in line with the stock, a market source said.

While the trading activity took place while stock was low, Intel stock broke out on Friday to set a new 52-week high.

Intel stock closed Friday at $57.07, an increase of 3.39%.

AXA active

AXA’s 7.25% mandatorily exchangeable bonds due 2021 continued to make gains on an outright basis on Friday as AXA Equitable Holdings’ stock also rose.

The notes were up about 1 point to trade at 108.7 versus an equity price of $21.69.

AXA Equitable Holdings’ stock closed Friday at $21.54.

The 7.25% notes dropped about 2.75 points on an outright basis on Tuesday to 106.5 as the underlying equity slumped 5.5%.

The notes have slowly rebounded throughout the week, closing Friday near their previous level of 109.

AXA priced $750 million of the three-year bonds on May 9 alongside the AXA Equitable Holdings IPO. The IPO was the largest of the year and had an initial offer price of $20.00.

Mentioned in this article:

AXA Equitable Holdings, Inc. NYSE: EQH

GDS Holdings Ltd. Nasdaq: GDS

Intel Corp. Nasdaq: INTC

Teradyne Inc. NYSE: TER

Workday Inc. Nasdaq: WDAY

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