Morning Commentary: Carnival, Luckin Coffee convertible notes in focus in early trading

By Abigail W. Adams

Portland, Me., April 3 – The convertibles secondary space saw decent trading volume early in Friday’s session as equities stood poised to close out a volatile week in the red.

While volume was decent, activity was dominated by two names – Carnival Corp. and Luckin Coffee Inc.

Carnival’s newly priced 5.75% convertible notes due 2023 remained volatile in secondary activity, although the notes were trading largely in line with stock, a source said.

The notes traded as high as 103.75 shortly after the opening bell but were changing hands just north of 102.125 about one hour into the session.

Carnival stock traded as high as $8.74 shortly after the opening bell but was changing hands at $8.17, an increase of 2.51%, shortly before 11 a.m. ET.

The notes were also volatile on their market debut, trading as low as 98 and as high as 105 on an outright basis.

The notes were expanded as much as 2 points dollar-neutral in intraday trading on Thursday although they closed the session flat, sources said.

While the notes were actively traded early Friday with more than $10 million in reported volume, volume was light given the $1.75 billion size of the deal.

While Carnival’s new convertible notes were active, Luckin Coffee’s 0.75% convertible notes due 2025 topped the volume charts early Friday.

The notes continued to change hands around 21 as stock continued its downward momentum.

Luckin stock traded down to $5.75, a decrease of 10.09%, shortly before 11 a.m. ET.

The 0.75% convertible notes tanked on Thursday, dropping almost 60 points outright and contracting 30 points on a dollar-neutral, or hedged, basis as stock plunged upwards of 75%.

Luckin’s convertible notes and equity sold off after the Beijing-based coffee shop chain announced an internal investigation found the chief operating officer had fabricated sales figures in 2019.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.