JPMorgan’s Voya-linked notes top par; Tesla remains in focus; Momo drops outright

By Abigail W. Adams

Portland, Me., April 29 – The convertibles secondary space launched the week with a slow start with about $69 million on the tape about one hour into the session and $320 million on the tape by the late afternoon.

While there was movement in some names, the overall space was quiet with trading activity centered on earnings and the spike in volatility that some names are expected to see as a result, sources said.

The primary market was dormant on Monday, and the new deal calendar is expected to remain light throughout the week as earnings reports pile in.

Tesla Inc.’s convertible bonds remained major volume movers in the secondary space as stock rebounded from its previous lows.

JPMorgan Chase Financial Co. LLC’s 0.25% cash-settled equity-linked notes due 2023 tied to Voya Financial, Inc. saw high-volume activity on Monday with the notes improving.

Neurocrine Biosciences Inc.’s 2.25% convertible notes due 2024 were also active in the run up to the biopharmaceutical company’s first-quarter earnings report, which will be announced after the market close.

Momo Inc.’s 1.25% convertible notes due 2025 dropped outright as stock sank on news China was censoring a subsidiary.

More Tesla

Tesla’s convertible notes remained in focus in the secondary space with the notes improving on an outright basis as stock rebounded from its lows.

Tesla’s 2.375% convertible notes due 2022 gained about 1.375 points outright.

They were changing hands at 103.15 versus a stock price of $241.03 in the mid-afternoon, according to a market source.

More than $18.5 million of the bonds were on the tape during Monday’s session.

Tesla’s 1.25% convertible notes due also gained about 1.375 point outright. They were changing hands just shy of 99 versus an equity price of $238.89.

More than $12 million of the bonds had changed hands.

Tesla stock traded to a low of $232.17 and a high of $243.98 before closing the day at $241.47, an increase of 2.69%.

Stock was rebounding on Monday on news CEO Elon Musk and the Securities and Exchange Commission had reached an agreement related to his use of Twitter.

SolarCity Corp.’s 1.625% convertible notes due Nov. 1, 2019 continued to trade around 97 during Monday’s session, sources said.

Tesla’s convertible notes and stock have been under pressure since the electric car manufacturer reported a large earnings miss on April 24.

However, SolarCity’s notes have gained upwards of 1 point on the prospects of an additional capital raise, sources said.

While the capital raise is not immediately necessary, it would be a net positive for Tesla’s capital structure, a source said.

Voya-linked notes improve

JPMorgan’s 0.25% equity-linked notes tied to Voya saw high-volume activity on Monday with two trades totaling $10 million on the tape early in the session, according to a market source.

The 0.25% notes changed hands just shy of 101.

While volume has been light, the equity-linked notes have made significant gains since mid-April when they popped above par for the first time since June 2018, according to Trace data.

The 0.25% notes have largely languished in the low to mid-90 range for much of 2019.

Voya stock has been on the rise since mid-April. Stock closed Monday at $54.90, an increase of 0.68%.

Neurocrine active

Neurocrine Biosciences’ 2.25% convertible notes due 2024 were active in the run up to the biopharmaceutical company’s first-quarter earnings report, which was slated to be announced after the market close.

The 2.25% convertible notes were changing hands around 126.25 versus an equity price of $77.30, according to a market source.

About $7 million of the bonds were on the tape during Monday’s session.

Neurocrine Biosciences stock closed Monday at $76.77, an increase of 0.84%.

The notes were also active on Friday as stock slipped 3% following news Express Scripts would not include Neurocrine’s Ingrezza in its formulary for its Medicare plans.

Momo drops

Momo’s 1.25% convertible notes due 2025 dropped on an outright basis as stock sank following news the Chinese government was making moves to sensor one of its subsidiaries.

The 1.25% notes dropped about 2.75 points outright. They were seen changing hands just north of 92.75 versus an equity price of $33.60.

The notes saw about $5 million in reported volume during Monday’s session.

Momo stock traded as low as $33.33 during Monday’s session and closed the day at $34.36, a decrease of 6.81%.

Stock was down on news the Chinese government had directed some Chinese app stores to remove the Tantan dating app.

Momo purchased Tantan, China’s version of Tinder, in February of 2018.

Proceeds from Momo’s 1.25% convertible notes, which were priced in June 2018, were used to repay the bank loan that helped fund the Tantan purchase and invest in Tantan’s business development.

Momo stated in a press release that it is working with government authorities to restore the availability of the Tantan dating app.

Mentioned in this article:

Momo Inc. Nasdaq: MOMO

Neurocrine Biosciences Inc. Nasdaq: NBIX

Tesla Inc. Nasdaq: TSLA

Voya Financial, Inc. NYSE: VOYA

© 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.