Nio’s new convertibles remain contracted; Tesla active; Infinera up; Weatherford jumps

By Abigail W. Adams

Portland, Me., Feb. 1 – The convertibles secondary space was quiet yet firm on Friday.

Nio Inc.’s 4.5% convertible notes due 2024 remained active with the notes trading in a wide range, sources said.

For those that participated in the borrow facility, the notes appeared to be performing well. However, for outright holders and those with no borrow they remained under water.

Tesla Inc.’s 0.25% convertible notes due March 1 were also active on Friday with the notes continuing to trade at par, despite a bump in stock.

Infinera Corp.’s 2.125% convertible notes due 2024, which were pointed to as one of the worst performing deals of 2018, were improved on an outright basis as stock soared on Friday.

Weatherford International Ltd.’s 5.875% convertible notes due 2021 jumped on an outright basis following the company’s fourth-quarter earnings report.

Overall, the tone was good in the secondary space with demand returning for some of the riskier names that have languished below par, a market source said.

Sources were hopeful the return of the risk-on sentiment would translate into more deals in the coming week.

Nio day two

Nio’s 4.5% convertible notes due 2024 continued to see large swings in the secondary space on Friday with some trades as high as 103 and others as low as 98.5, sources said.

The notes were also volatile on Thursday with some prints as high as 103 and others as low as 96.5, sources said.

For those that were able to participate in the borrow facility, the notes appeared to be trading well, a market source said.

However, only those that participated know the going price of the American Depositary Shares in the borrow facility, making it difficult to determine where the 4.5% convertible notes stood on a dollar-neutral basis for those trades.

For those that were unable to participate in the borrow facility, Nio’s convertible notes remained under water on Friday.

The notes were trading between 98.5 and 99 on Friday with stock up. They were contracted as much as 5 points dollar-neutral on their market debut on Thursday.

Nio’s ADRs traded as high as $8.10 soon after the opening bell on Friday but came in as the session progressed. The ADRs closed Friday at $7.90, an increase of 0.25%.

Despite the low trading level of the convertible notes, Nio stock has posted gains since the convertible notes priced, climbing 5.63% on Thursday.

The financing was a positive for the Shanghai-based electric car manufacturer, a market source said.

Tesla active

Tesla’s 0.25% convertible notes due March 1, 2019 were again active on Friday although the notes were unchanged.

They continued to trade at par with the maturity of the notes now 28 days away.

Despite a bump in Tesla’s stock on Friday, there is little likelihood it will be above the $359 conversion price of the 0.25% notes at the end of averaging period.

Tesla stock was on the rise on Friday after trading largely flat following the electric car manufacturer’s fourth-quarter earnings.

Stock traded as high as $316.10 before closing the day at $312.37, an increase of 1.74%.

News that Tesla had begun taking orders in China for a cheaper version of Model 3 sedans helped lift the stock.

Infinera improves

Infinera’s long struggling 2.125% convertible notes due 2024 were boosted on Friday as stock soared in high-volume activity.

The notes rose 7 points outright to close Friday at 82. Stock soared on Friday although there was no news to explain the upward momentum.

Stock closed Friday at $5.17, an increase of 17.5%. Trading volume for stock was more than 3x the average.

More than 7.27 million shares changed hands on Friday versus the average trading volume of 2.22 million shares.

Weatherford jumps

Weatherford’s 5.875% convertible notes due 2021 dominated trading activity in the secondary space on Friday with the notes jumping following its fourth-quarter earnings report.

The 5.875% notes rose more than 6 points outright to close the day just north of 74.25, according to a market source.

More than $20 million of the bonds changed hands during Friday’s session.

While Weatherford missed on both the top and bottom lines in its fourth-quarter earnings report, stock soared following the report.

Weatherford stock closed Friday at $0.77, an increase of 19.4%.

Weatherford reported non-GAAP loss per share of 14 cents for the fourth quarter, which missed analyst expectations of a loss per share of 12 cents.

Revenue came to $1.43 billion, which also missed analyst expectations of $1.44 billion.

However, Weatherford reported $210 million in adjusted EBITDA and $65 million in free cash flow, which many considered a positive, according to Seeking Alpha.

Mentioned in this article:

Infinera Corp. Nasdaq: INFN

Nio Inc. NYSE: NIO

Tesla Inc. Nasdaq: TSLA

Weatherford International Ltd. NYSE: WFT

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