Convertibles primary, secondary markets quiet; Lumentum trades down outright; Nio gains

By Abigail W. Adams

Portland, Me., Jan. 19 – The convertibles primary was “eerily” quiet on Tuesday, a source said, with no deals announced despite a strong day for equities.

The market may be on hold until the successful inauguration of president-elect Joseph Biden on Wednesday, a source said.

While equity markets were strong, there was still an element of caution due to the threats of violence surrounding the inauguration.

The secondary market also saw a quiet return from the long weekend.

There was $87 million on the tape about one hour into Tuesday’s session and $600 million on the tape about one hour before the market close, sources said.

Illumina Inc.’s 0% convertible notes due 2023 and Ares Capital Corp.’s 4.625% convertible notes due 2024 topped the volume charts although there was little notable movement in the names.

Lumentum Holdings Inc.’s 0.5% convertible notes due 2026 were active and trading down on an outright basis as stock sold-off after the company announced an acquisition.

Nio Inc.’s two tranches of convertible notes remained active with the notes gaining outright as the company’s ADSs rebounded from last Friday’s sell-off.

Volume movers

Illumina’s 0% convertible notes due 2023 and Ares Capital’s 4.625% convertible notes due 2024, both rated investment grade, topped the volume charts on Monday.

However, there was little notable movement in either, sources said.

Illumina’s 0% convertible notes were up about 1 point outright with stock up a little over 3%.

The 0% notes were changing hands at 115.5 versus a stock price of $389.54 in the late afternoon.

There was more than $18 million on the tape during Tuesday’s session.

Illumina’s stock traded to a high of $390.83 and a low of $379.97 before closing the day at $390.21, an increase of 3.68%.

Ares Capital’s 4.625% notes due 2024 were also active.

The 4.625% notes continued to trade on a 106-handle. They were changing hands just shy of 106.5 in the late afternoon with about $16 million in reported volume.

Ares Capital’s stock traded to a high of $17.42 and a low of $17.09 before closing the day at $17.30, an increase of 0.58%.

Lumentum’s acquisition

Lumentum’s 0.5% convertible notes due 2026 were active with the notes trading down alongside stock after the company announced it was acquiring Coherent Inc. for $5.7 billion.

The 0.5% notes were down 8 points outright with stock off more than 10%.

The notes were trading at 124 versus a stock price of $95.20 in the late afternoon, according to a market source.

There was about $15 million of the bonds on the tape.

Lumentum’s stock traded to a high of $96.78 and a low of $91.91 before closing the day at $94.60, a decrease of 11.02%.

Stock sold off after the optical components maker announced it was acquiring laser maker Coherent for $5.7 billion in a cash and stock deal.

Coherent shareholders will receive $100 in cash and 1.1851 shares of Lumentum, according to the terms of the deal, The Wall Street Journal reported.

Nio improves

Nio’s recently priced convertible notes remained active with the notes gaining on an outright basis as the company’s ADSs rebounded from a minor sell-off last Friday.

Nio’s 0% convertible notes due 2026 were up 1.5 points outright with the Shanghai-based electric car manufacturer up a little over 2%.

The notes were changing hands around 103.25 versus an equity price of $57.27.

The notes saw about $6 million in reported volume, according to a market source.

While improved, Nio’s 0.5% convertible notes due 2027 remained on a par handle.

The notes were changing hands at 100.625 early in the session.

Nio’s ADSs traded to a low of $56.41 and a high of $59.00 before closing the day at $58.44, an increase of 3.87%.

Mentioned in this article:

Ares Capital Corp. Nasdaq: ARCC

Illumina Inc. Nasdaq: ILMN

Lumentum Holdings Inc. Nasdaq: LITE

Nio Inc. NYSE: NIO

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