BofA Voya-linked notes in focus; Tesla active; Chegg jumps outright

By Abigail W. Adams

Portland, Me., July 8 – The convertibles primary market was dormant and trading activity in the secondary space was light on Monday in a slow return from the Independence Day holiday week, sources said.

There was about $250 million in reported volume heading into the market close with one of the most actively traded issues on the tape “not even a real convertible,” a market source said.

BofA Finance LLC’s cash-settled equity-linked notes tied to Voya Financial, Inc. were among the top-traded issues during Monday’s session.

While the 0.25% notes were largely unchanged from Friday’s close, the notes have improved over the past week, reaching their highest outright price of the year.

Tesla Inc.’s 2% convertible notes due 2024 remained in focus. While the notes were coming in on an outright basis, they were trading largely in line with stock.

While volume was light, Chegg Inc.’s 0.125% convertible notes due 2025 made large gains on an outright basis during Monday’s session as stock broke out to a new 52-week high.

BofA in focus

BofA Finance’s 0.25% equity-linked notes due 2023 were among the most active issues in the secondary space with $10 million on the tape shortly before the market close, according to a source.

The 0.25% notes were changing hands at 101.5 on Monday with Voya stock at $56.70.

Voya stock closed Monday at $56.59, a decrease of 0.51%.

While the notes were largely unchanged from Friday’s close, they were at their highest outright price of the year, according to Trace data.

Voya stock has been on the rise since the end of June, lifting the equity-linked notes along with it.

The 0.25% notes have largely languished below par since pricing in April 2018.

BofA Finance’s 0.25% notes were part of a wave of equity-linked notes tied to Voya Financial that priced in 2018.

JPMorgan priced two issues of equity-linked notes tied to Voya in January and April of 2018 and Deutsche Bank priced an issue of equity-linked notes tied to Voya in March 2018.

The plethora of equity-linked note deals was due to banks monetizing the warrants for Voya they owned due to Voya’s spinoff from ING, sources said at the time.

Tesla active

Tesla’s 2% convertible notes due 2024 were again in focus in the secondary space with the notes trading down on an outright basis as stock came in.

However, the notes were largely unchanged dollar-neutral, a source said.

The 2% notes traded down 1 point outright on Monday. They were seen changing hands at par heading into the market close.

Tesla stock closed Monday at $230.34, a decrease of 1.18%.

The notes saw $10 million in reported volume by the late afternoon.

The 2% notes surged on July 3 after Tesla released its car sales report for the second quarter, which surpassed analyst expectations.

While the notes traded as high as 102.5 on July 3, they have come in on an outright basis alongside stock as optimism surrounding the company diminished.

Chegg jumps

While volume was light, Chegg’s 0.125% convertible notes due 2025 jumped on an outright basis as stock surged on Monday.

The 0.125% notes were up 5.5 points outright. They were changing hands just north of 108.125, according to a market source.

The notes saw $4 million in reported volume during Monday’s session.

Chegg stock traded to a low of $40.54 and a high of $44.54 before closing the day at $43.26, an increase of 6.68%.

Stock broke out to a new 52-week high during Monday’s session.

Mentioned in this article:

Chegg Inc.

NYSE: CHGG

Tesla Inc.

Nasdaq: TSLA

Voya Financial, Inc.

NYSE: VOYA

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