Livent convertible notes in focus, expand in secondary; Cinemark tanks; AMAG trades down

By Abigail W. Adams

Portland, Me., Oct. 5 – The convertibles primary market was again dormant on Monday even as equities jumped following president Donald Trump’s improved condition and pending release from the hospital.

The Dow Jones industrial average closed the day up 465 points, or 1.68%, the S&P 500 index was up 1.8% and the Nasdaq composite was up 2.32%.

However, with conflicting information circulating about the severity of the president’s illness, many were most likely waiting to see if the rebound in equity markets will have a staying effect, a source said.

Meanwhile, the secondary space continued to see light trading volume following a week with no new paper.

There was $28 million in reported volume about one hour into the session.

“Now this is a Monday,” a source said.

While there was little to no activity early in the session, trading volume picked up in the afternoon with about $267 million on the tape about one hour before the market close.

Company news was the driving force of trading activity.

Livent Corp.’s 4.125% convertible notes due 2025 were in focus on Monday with the notes skyrocketing on an outright and dollar-neutral basis.

The notes were riding the wave for lithium stocks created by Tesla Inc. as the electric car maker attempts to produce its own lithium batteries.

Cinemark Holdings Inc.’s 4.5% convertible notes due 2025 tanked on an outright and dollar-neutral basis after competitors closed theaters and potential blockbuster movie releases were delayed.

AMAG Pharmaceuticals Inc.’s 3.25% convertible notes due 2022 were trading down on Monday after news broke the Food and Drug Administration was rescinding approval for one of its products, which sparked concern about the company’s pending takeover.

While volume was comparatively light, Aphria Inc.’s 5.25% convertible notes due 2024, an off-the-run name that is typically slow to trade, saw some activity on Monday with the notes making gains as stock soared following an analyst upgrade.

Livent in focus

Livent’s 4.125% convertible notes due 2025 were in focus on Monday with the notes skyrocketing on an outright and dollar-neutral basis.

The 4.125% notes jumped more than 20 points outright with stock up more than 17%.

They were changing hands at 148.25 in the late afternoon.

The notes expanded 3 points dollar-neutral, a source said.

Livent’s stock traded to a low of $10.37 and a high of $11.35 before closing the day at $11.29, an increase of 18.10%.

The stock of the lithium technology company skyrocketed as Tesla prepares to build its own batteries and zeroes in on a supply chain.

Tesla recently inked an agreement with Peidmont Lithium, which sent the shares of that company skyrocketing more than 200%.

There is speculation that Livent may be a future Tesla supplier as well, a source said.

Cinemark tanks

Cinemark’s 4.5% convertible notes due 2025 plunged on an outright and dollar-neutral basis as competitors shuttered theaters as the release dates for potential blockbuster movies are delayed.

The 4.5% convertible notes traded down more than 10 points outright as stock sank more than 17%.

They were changing hands at 86.625 in the late afternoon.

The notes were contracted 3 points dollar-neutral, a source said.

Cinemark’s stock traded to a high of $9.65 and a low of $8.22 before closing the day at $8.33, a decrease of 17.44%.

Stock plummeted after competitor Regal Cinemas announced it was closing all theaters in the United States due to the lack of interest of customers.

The theater closures were also due to the delayed release of the latest James Bond movie, “No Time To Die,” Regal Cinemas said.

AMAG trades down

Just two trading sessions after AMAG’s 3.25% convertible notes due 2022 skyrocketed following news of a takeover, the notes were trading down with the takeover in question.

The 3.25% notes traded down to 98.75 late Monday after previously trading on a 99-handle.

Holders were offloading the notes following news the FDA rescinded approval for AMAG’s product Makena, which was approved in February 2011 to reduce the risk of pre-term birth.

The drug has been very controversial, a source said.

While there was concern the news may hold up the merger, the deal “seems ironclad,” the source said.

The 3.25% convertible notes jumped about 10 points outright on Thursday following news Apollo Global Management’s Covis Group Sarl would acquire the company for $13.75 per share in cash.

The acquisition would cost $647 million on an enterprise basis, which includes debt.

The acquisition triggers the change-of-control put option on the convertible notes.

Aphria trades

Aphria’s 5.25% convertible notes due 2024, an off-the-run issue that rarely trades in volume, saw some activity on Monday.

The 5.25% convertible notes were changing hands at 78 early in the session and rose to 79 by the late afternoon.

There was $3 million of reported volume on the tape.

Aphria’s stock traded to a high of $5.04 and a low of $4.45 before closing the day at $5.03, an increase of 14.06%.

The cannabis company’s stock jumped after a Cantor Fitzgerald analyst raised Aphria’s price target and reiterated its “overweight” rating for the stock.

Aphria is scheduled to release its earnings report on Oct. 15.

Mentioned in this article:

AMAG Pharmaceuticals Inc. Nasdaq: AMAG

Aphria Inc. Nasdaq: APHA

Cinemark Holdings Inc. NYSE: CNK

Livent Corp. NYSE: LTHM

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