Morning Commentary: Convertibles secondary market asleep; Chegg notes active, flat

By Abigail W. Adams

Portland, Me., Aug. 29 – The convertibles secondary space was asleep early Monday with few names on the tape and little movement in the names that did trade, a source said.

“It is going to be a quiet week,” a source said.

Market players were cashing in on vacation time ahead of the Labor Day weekend.

While the convertibles primary market surprised with a late burst of summer activity the previous week, sources do not expect to see more new paper until after the Labor Day holiday, especially with risk assets again taking a hit on renewed rate and recession concerns.

Equity indexes remained in the red on Monday after heavy selling following last Friday’s hawkish speech from Federal Reserve chair Jerome Powell.

The Dow Jones industrial average was down 239 points, or 0.74%, the S&P 500 index was down 0.72%, the Nasdaq Composite index was down 0.94% and the Russell 2000 index was down 0.26% shortly before 11 a.m. ET.

There was $32 million in reported volume about one hour into the session with no name seeing more than $5 million in reported volume.

Chegg Inc.’s 0% convertible notes due 2026 were among the few names to see more than two trades early in the session.

The Santa Clara, Calif.-based online textbook rental, tutoring, scholarship and internship matching company’s 0% notes were little changed on an outright basis.

The notes traded just shy of 77 with the yield 6.659%.

There was $3 million in reported volume.

Chegg’s stock was changing hands at $19.61, an increase of 1.34%, shortly before 11 a.m. ET.

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