China-based convertibles eyed; Ctrip.com’s 1% convertibles go current; iQIYI volatile

By Abigail W. Adams

Portland, Me., July 1 – The convertible secondary space was strong on Monday with market players riding the rally sparked by the trade truce announced at the G-20 summit.

The overall market was up about 0.25 point dollar-neutral, a market source said. And convertibles from China-based issuers and the semiconductor sector were in focus.

While the secondary space was active early in Monday’s session as equities peaked, trading activity tempered into the afternoon.

There was $95 million on the tape about one hour into Monday’s session and $278 million in reported volume heading into the market close, sources said.

While equities launched the day on strong footing, they pared their gains as the session progressed.

iQIYI Inc.’s 2% convertible notes due 2025 were major volume movers on Monday with the notes volatile alongside the company’s equity. While the notes topped par in intraday trading, they closed the day below.

Ctrip.com International Ltd.’s 1% convertible notes due 2020 were active with the notes “going current” on Monday.

YY Inc.’s 0.75% convertible notes due 2025 and 1.375% convertible notes due 2026 reached their highest outright level since pricing on Monday.

Microchip Technology Inc.’s 1.625% convertible notes due 2027 were among the volume movers as stock gained with the semiconductor sector one of the major beneficiaries of thawing trade relations between the United States and China.

iQIYI breaks par

iQIYI’s 2% convertible notes due 2025 were among the top traded issues during Monday’s session with the notes volatile alongside the company’s equity.

The 2% notes traded as high as 101.5 early in the session as its equity improved amid a broader post- G-20 summit rally.

However, the 2% notes came in as the session progressed. They were changing hands around 98.875 by the mid-afternoon.

More than $14 million of the bonds were on the tape by the late afternoon, making them among the most active in the secondary space.

The Beijing-based online entertainment service provider’s ADSs traded as high as $21.99 early in the session but closed the day at $20.725, an increase of 0.36%.

The 2% notes have traded below par since early May when the equity collapsed amid increased tensions between the United States and China.

Ctrip.com goes current

Ctrip.com’s 1% convertible notes due July 1, 2020 were active early in Monday’s session although trading activity tempered into the afternoon.

The 1% convertible notes were up about 1 point outright to change hands around 99.5, according to a market source.

The notes saw more than $9 million in reported volume.

Ctrip.com ADSs traded up to $39.68 early in the session but closed the day at $38.66, an increase of 4.74%.

The 1% convertible notes went current on Monday, a market source said. With their maturity now less than one year away, they were no longer considered long-term bonds.

The Shanghai-based online travel services company was rumored to be considering a new convertible notes offering of up to $800 million in April, which has yet to materialize.

However, Ctrip.com’s convertible notes have been active in recent weeks, leading sources to speculate that a new offering may be near at hand.

The 1% convertible notes currently have $700 million outstanding, a market source said. “They’ll have to do something,” the source said.

YY notes improve

YY’s recently priced two tranches of convertible notes were improving on an outright and dollar-neutral basis on Monday.

The 0.75% convertible notes due 2025 rose 2.5 points outright to 103.5 during Monday’s session. The bonds saw almost $10 million in reported volume.

The 1.375% convertible notes due 2026 rose about 2 points outright to 103.25, according to a market source.

The notes hit their highest outright level on Monday since pricing on June 20.

The ADSs of the Guangzhou, China-based global social media platform traded up to $73.77 but closed the day at $72.62, an increase of 4.2%.

Microchip active

Microchip’s 1.625% convertible notes due 2027 were also active on Monday as stock posted gains.

The 1.625% convertible notes were up 2 points outright.

They were changing hands just south of 122.375 versus a stock price of $90.09, according to a market source.

Almost $9 million of the bonds were on the tape heading into the market close.

Microchip stock traded as high as $91.52 and as low as $90 before closing the day at $91.43, an increase of 5.46%.

Stock was posting gains alongside the broader semi-conductor sector in the wake of the announced trade truce between China and the United States.

Mentioned in this article:

Ctrip.com International Ltd. Nasdaq: CTRP

iQIYI Inc. Nasdaq: IQ

Microchip Technology Inc. Nasdaq: MCHP

YY Inc. Nasdaq: YY

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