Morning Commentary: China-based convertibles issuers in focus in early trading activity

By Abigail W. Adams

Portland, Me., Sept. 24 – Following a flurry of activity the previous session, the convertibles secondary was again slow early Friday as equity markets struggled to find direction.

There was $74 million in reported volume a little more than one hour into the session with few names seeing concentrated trading activity.

China-based convertibles were among the most actively traded early in the session as the market grapples to understand the implications of China Evergrande Group’s missed interest payments on its bonds and Beijing’s latest regulatory crackdown on cryptocurrency.

iQIYI Inc.’s 4% convertible notes due 2026 were coming in on an outright basis as stock dropped more than 5%.

The 4% notes dropped about 1 point outright.

They were changing hands at 83.375 versus an equity price of $7.93 early in the session, according to a market source.

The yield on the notes was about 11%.

There was about $6 million in reported volume.

iQIYI’s American Depositary Shares were changing hands at $7.97, a decrease of 5.79%, shortly before 11 a.m. ET.

Huazhu Group Ltd.’s 3% convertible notes due 2026 were also active.

The notes were changing hands at 132.375 versus an equity price of $46.75.

There was about $4 million in reported volume.

Huazhu’s American Depositary Shares were trading at $46.71, a decrease of 1%, shortly before 11 a.m. ET.

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