Morning Commentary: Chegg convertible notes active pre-earnings as equity markets sink

By Abigail W. Adams

Portland, Me., Oct. 26 – The convertibles secondary space launched the week with light trading volume as equities opened deep in the red on renewed concern about an uptick in Covid-19 cases.

The Dow Jones industrial average opened the day down 639 points, or 2.26%, the S&P 500 was down 1.86% and the Nasdaq composite down 1.43%.

However, the volatility in equities did not spark much activity in the secondary space.

There was $46 million on the tape about one hour into Monday’s session.

With the week a heavy one for earnings reports from convertible issuers, trading activity is expected to pick up as the week progresses, a source said.

Chegg Inc.’s 0.125% convertible notes due 2025 were active early in the session.

The notes were changing hands at 180 with more than $5.5 million in reported volume, a source said.

Chegg stock was changing hands at $86.44, a decrease of 0.23%, shortly before 11 a.m. ET.

The deep-in-the-money notes saw heavy volume late last week as well.

Chegg is scheduled to report earnings after the market close.

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