Convertibles secondary quiet; Caesars in focus; Liberty flat; Qudian drops outright

By Abigail W. Adams

Portland, Me., June 28 – After a flurry of activity with more than $1 billion in new paper entering the space over Wednesday and Thursday, the convertibles secondary market was quiet on Friday.

Whether it was the end of month, the end of the quarter, a Friday in the summer, or the uncertainty surrounding the pending meeting between president Donald Trump and president Xi Jinping at the G-20 summit, there were plenty of reasons to sit on the sidelines, sources said.

Few names saw concentrated trading activity, a market source said.

While volume was light, Qudian Inc.’s newly priced 1% convertible notes due 2026 were trading down alongside stock on Friday. However, the notes were moving in line on a dollar-neutral, or hedged, basis.

Liberty Latin America Ltd.’s 2% convertible notes due 2024 continued to see some action on Friday with the notes weaker on an outright basis but largely unchanged dollar-neutral.

Change Healthcare Inc.’s 6% par of $50 three-year tangible equity units were again active and posting gains in the secondary.

With activity surrounding the new deals tempering, Caesars Entertainment Corp.’s 5% convertible notes due 2024 returned to focus with the notes trading up alongside stock.

Qudain down outright

Qudian’s 1% convertible notes due 2026 were trading down alongside stock although the notes were little changed on a dollar-neutral basis, a market source said.

The notes dropped about 2 points outright to change hands at 100.625 early in the session.

However, the move was largely in line with the Xiamen, China-based online consumer credit provider’s equity, which was off more than 4%.

Qudian’s ADSs traded to a low of $7.35 before closing the day at $7.50, a decrease of 4.34%.

The 1% notes performed well on their market debut on Thursday with the notes closing the day on a 103 handle, a market source said.

They were expanded 0.5 point to 0.75 point dollar-neutral.

Liberty flat

Liberty Latin America’s 2% convertible notes due 2024 remained active on Friday with the notes trading down on an outright basis.

While the notes briefly dipped below par, they stood poised to close the day around 100.375.

The notes were moving alongside stock and largely unchanged dollar-neutral, according to a market source.

They saw about $8 million in reported volume by the mid-afternoon.

Liberty Latin America’s class C common stock traded as low as $16.98 before closing the day at $17.195, a decrease of 0.89%.

While the 2% notes have largely hovered around par since hitting the secondary space on Wednesday, they have seen a large dollar-neutral expansion with the notes up about 1.5 points on hedge.

The greenshoe on the notes was recently exercised in full, lifting the total size of the deal to $402.5 million.

Change gains

Change Healthcare’s 6% par of $50 three-year tangible equity units continued to gain in secondary trading on Friday.

The 6% units traded as high as $57.35 early in the session but were coming in as the session progressed.

They closed the day around $55.50, according to a market source.

Change’s common stock was coming in after a strong debut on Thursday.

Common stock closed Friday at $14.53, a decrease of 3.13%.

The tangible equity units priced alongside Change Healthcare’s IPO, which priced at $13.00 a share, after the market close on Wednesday.

Caesar in focus

Caesar Entertainment’s 5% convertible notes due 2024 returned to focus on Friday as activity surrounding the new paper to enter the space faded from focus.

The 5% convertible notes gained 0.5 point outright to trade up to 170.5 by the mid-afternoon, according to a market source.

Caesar’s stock also continued to post gains with stock closing the day at $11.81, an increase of 1.29%.

More than $21 million of the bonds were on the tape by the late afternoon.

The 5% notes have been active since Monday when Eldorado Resorts announced it would acquire the gaming company in a cash-and-stock deal valued at $17.3 billion.

Mentioned in this article:

Caesars Entertainment Corp. Nasdaq: CZR

Change Healthcare Inc. Nasdaq: CHNG

Liberty Latin America Ltd. Nasdaq: LILAK

Qudian Inc. NYSE: QD

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