Convertibles secondary firm; ON Semiconductor, Booking active; Zscaler down outright

By Abigail W. Adams

Portland, Me., Dec. 2 – The convertibles secondary space was quiet yet firm on Friday after a surge of buyers lifted the space the previous session.

Equity markets continued to wobble with a better-than-expected U.S. non-farm payroll report again calling into question the dovish pivot rally sparked by Federal Reserve chair Jerome Powell’s Wednesday comments.

However, the convertible secondary space remained better to buy with a flurry of new money being put to work, a source said.

Equity indexes launched Friday deep in the red but pared their losses to close the day mixed with the Dow Jones industrial average up 35 points, or 0.10%, the S&P 500 index down 0.12%, the Nasdaq Composite index down 0.18% and the Russell 2000 index up 0.50%.

Trading activity subsided after Thursday’s rush with $40 million in reported volume about one hour into the session and $300 million on the tape about one hour before the market close.

Booking Holdings Inc.’s 0.75% convertible notes due 2025 (A3/A-) saw heavy volume although with little movement in price.

ON Semiconductor Corp.’s 0% convertible notes due 2027 were also active with the notes lower alongside stock.

Zscaler Inc.’s 0.125% convertible notes due 2025 continued to see a volatile week with the notes falling outright as stock tanked post-earnings.

Active issues

Booking Holdings’ 0.75% convertible notes due 2025 and ON Semiconductor’s 0% convertible notes due 2027 were among the most actively traded issues in the secondary space on Friday.

Booking’s 0.75% notes were wrapped around 139.25 in heavy volume.

There was $11.5 million on the tape.

Booking’s stock traded to a low of $2,024.73 and a high of $2,094.49 before closing the day at $2,085.44, an increase of 1.22%.

ON Semiconductor’s 0% convertible notes due 2027 were lower alongside stock in heavy volume.

The 0% convertible notes were down 5 points outright with stock off about 4% in intra-day activity.

There was $11 million in reported volume.

ON’s stock traded to a high of $73.12 and a low of $70.96 before closing the day at $73.04, a decline of 1.28% on the day.

Zscaler earnings

Zscaler’s 0.125% convertible notes due 2025 continued to see a volatile week with the notes falling outright as stock tanked post-earnings.

The 0.125% convertible notes were down 6.5 points outright with stock off more than 10%.

The convertibles were changing hands at 112 versus a stock price of $127.47 in early trading.

They continued to trade around 112 in the late afternoon.

The notes expanded on the move down with the theoretical delta on the notes about 75%, a source said.

However, the notes “whipped around” with stock over the past three sessions and have not made a large move on a weekly basis, a source said.

“I’m sure if you traded your gamma around you’re doing OK given the somewhat uniquely balanced profile,” the source said.

Zscaler’s stock traded to a low of $126.40 and a high of $132.62 before closing the day at $128.99, a decrease of 10.73%.

Stock fell despite an earnings beat with the cybersecurity firm reporting earnings per share of 29 cents versus analyst expectations of earnings per share of 26 cents.

Revenue was $355.55 million versus the $340.79 million expected.

Zscaler’s stock and convertible notes have been volatile over the past two sessions.

The notes were under pressure early Wednesday after disappointing earnings from an industry peer but pared their losses in Wednesday’s post-Powell rally and continued to make strong gains on Thursday.

Mentioned in this article:

Booking Holdings Inc. Nasdaq: BKNG

ON Semiconductor Corp. Nasdaq: ON

Zscaler Inc. Nasdaq: ZS

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