Morning Commentary: Wolfspeed convertible notes drop below par; Stride notes soar

By Abigail W. Adams

Portland, Me., Jan. 25 – The domestic convertibles primary market remained dormant on Wednesday with the window of opportunity for new issuance in January coming to a close.

Deals are in the works and the floodgates are expected to open, sources said.

However, with disappointing earnings from Microsoft Corp. dragging down equity markets, expectations for activity post-close were low.

Meanwhile, the convertibles secondary space was off to a slow start as selling accelerated in equities.

The Dow Jones industrial average was down 370 points, or 1.10%, the S&P 500 index was down 1.36%, the Nasdaq Composite index was down 1.88% and the Russell 2000 index was down 1.25% shortly before 11 a.m. ET.

There was $50 million on the tape about one hour into the session with no name seeing more than $5 million in reported volume.

Wolfspeed Inc.’s convertible notes were active with the notes lower alongside stock.

The 1.875% convertible notes due 2029 fell below par in early trading after hitting their highest outright level the previous session since pricing.

The 1.875% notes were off about 2.5 points outright with stock down almost 3%.

They were changing hands at 99.25 early in the session, a source said.

There was $3 million in reported volume.

Wolfspeed’s stock was trading at $79.20, a decrease of 2.95%, shortly before 11 a.m. ET.

While volume in the issue was light, Stride Inc.’s (formerly K-12 Inc.) 1.125% convertible notes due 2027 skyrocketed outright alongside stock following earnings.

The 1.125% convertible notes gained 13 points outright with stock up more than 25%.

The notes shot above par and were seen at 103.5 versus a stock price of $41.28 early in the session.

However, only one trade was on the tape.

Stride’s stock was trading at $40.45, an increase of 26.41%, shortly before 11 a.m. ET.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.