Tesla convertibles in focus, improve; IAC gains continue; Nio down again; Splunk active

By Abigail W. Adams

Portland, Me., May 24 – The convertibles secondary space rounded out a volatile week for capital markets with a quiet session.

While active early with more than $91 million on the tape, volume dwindled into the afternoon with about $289 million in reported volume with only about one hour left in the session, sources said.

Given the volatility in capital markets, market players were getting their trades in early and offloading certain names before the extended weekend, a market source said.

Given the unpredictability of the current geopolitical environment, holders did not want to go long in certain names, a market source said.

Tesla Inc.’s convertible notes remained in focus with the tranches again improved even as stock dropped.

IAC/InterActive Corp.’s recently priced tranches were posting gains on an outright and dollar-neutral basis on Friday with both tranches closing the week above par.

Nio Inc.’s 4.5% convertible notes due 2024 continued to sink in active trading with the notes in distressed territory.

Splunk Inc.’s 0.5% convertible notes due 2023 and 1.125% convertible notes due 2025 were down outright but largely unchanged dollar-neutral as stock took a hit post-earnings.

Tesla improves

Tesla’s convertible notes remained major volume movers in the secondary space with the notes improving dollar-neutral as stock again moved lower.

Each tranche improved about 0.5 point dollar-neutral, a market source said.

Tesla’s 1.25% convertible notes due 2021 were among the most actively traded issues during Friday’s session.

The 1.25% notes were changing hands around 90.5 early Friday and closed the day at 90.75.

There was more than $14 million in reported volume during the session.

Tesla’s 2% convertible notes due 2024 closed the day at 87.75. There was about $6 million of the bonds on the tape during Friday’s session.

Tesla’s 2.375% convertible notes due 2022 saw the lightest volume out of the three tranches. The 2.375% convertible notes closed the day just north of 90.125.

Tesla stock continued to see large price swings on Friday. Stock traded to a high of $199.98 and a low of $188.75 before closing the day at $190.63, a decrease of 2.49%.

IAC gains continue

IAC’s recently priced tranches continued to make gains on a dollar-neutral basis on Friday. While previously trading down with stock, the notes also improved outright and closed the week above par.

IAC’s 0.875% exchangeable notes due 2026 traded up to par on Friday.

They were expanded about 0.5 point dollar-neutral, a market source said.

While posting gains on a dollar-neutral basis on Thursday, they were changing hands at 98.5 bid, 99 offered.

IAC’s 2% exchangeable notes due 2030 traded as high as 101 on Friday. They were also expanded about 0.5 point dollar-neutral.

The bonds were changing hands at 99 bid, 99.75 offered on Thursday.

While the notes have been volatile on an outright basis, they have posted steady gains dollar-neutral since their market debut on Wednesday.

Nio down again

Nio’s 4.5% convertible notes due 2024 continued their downward trajectory on Friday with the notes sinking further into distressed territory.

The notes traded as low as 66 on Friday with the yield approaching 15%.

The Shanghai-based electric car manufacturer’s ADSs also continued their downward spiral, closing Friday at $3.86, a decrease of 1.78%.

The 4.5% notes have dropped almost 10 points throughout the course of the week with stock also plummeting.

The notes have struggled since hitting the secondary space in late January. They are now a distressed situation, a market source said.

Nio is scheduled to report its first-quarter earnings prior to the market open on May 28.

Splunk active

Splunk’s two tranches of convertible notes were active on Friday as stock got hit despite a first-quarter earnings beat.

While the convertible notes were down on an outright basis, they were trading largely in line dollar-neutral.

Splunk’s 0.5% convertible notes due 2023 dropped 4 points outright to close the day at 106, according to a market source.

The data-analytic software maker’s 1.125% convertible notes due 2025 dropped 4.375 points outright to close Friday at 107.875.

Splunk stock closed Friday at $119.30, a decrease of 7.33%.

Stock was trading down despite an earnings beat.

Splunk reported non-GAAP earnings per share of 2 cents versus analyst expectations for a loss per share of 14 cents.

Revenue was $425 million versus analyst expectations for revenue of $395 million.

However, stock was trading down due to expectations for reduced cash flow and slowing customer growth, Bloomberg reported.

Mentioned in this article:

IAC/InterActive Corp. Nasdaq: IAC

Nio Inc. NYSE: NIO

Splunk Inc. Nasdaq: SPLK

Tesla Inc. Nasdaq: TLSA

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