Tesla in focus, comes in; Nio on the rise; Qudian jumps; Ares Capital active; Chegg improves

By Abigail W. Adams

Portland, Me., July 9 – While the convertibles primary market remained dormant on Tuesday with no new deals in sight, the secondary market saw an uptick of activity.

There was $60 million in reported volume about one hour into Tuesday’s session and $318 million on the tape by the mid-afternoon, sources said.

However, there was no clear focus to the trading activity, which was dispersed across a broad swath of names.

Tesla Inc.’s 2% convertible notes due 2024 were among the most actively traded issues in the secondary space with the notes giving back most of their gains after a dramatic upswing the previous week.

Nio Inc.’s 4.5% convertible notes due 2024 also continued their upward momentum with the notes gaining up to 10 points outright in the past week.

Qudian Inc.’s 1% convertible notes due 2026 were also on the rise on Tuesday with the notes reaching their highest outright level since pricing.

Ares Capital Corp.’s 3.75% convertible notes due 2022 also saw high-volume activity.

Chegg Inc.’s 0.125% convertible notes due 2025 continued to improve on a dollar-neutral basis on Tuesday as the company’s stock wavered between gains and losses.

Tesla comes in

Tesla’s 2% convertible notes due 2024 were in focus on Tuesday with the notes giving back most of the gains seen in the previous week.

The 2% notes dropped back below par during Tuesday’s session. They were seen changing hands around 99.75 in the mid-afternoon.

The notes were down 1 point dollar-neutral from their highs in the previous week, a market source said.

Tesla stock traded to a high of nearly $231 and a low of $227.28 before closing the day at $230.06, a decrease of 0.12%.

The bonds saw more than $12 million in reported volume.

The 2% notes traded as high as 102.5 on an outright basis and jumped 1.25 points dollar-neutral during July 3’s abbreviated session. The large jump followed a second-quarter sales report that beat analyst expectations.

However, the notes started leaking at the end of last week and have since given back much of their gains, a market source said.

Nio on the rise

While Tesla’s stock and convertible notes were coming in over the past few sessions, Nio’s 4.5% convertible notes due 2024 continued to rise.

The 4.5% convertible notes climbed to a 59 handle on Tuesday, according to a market source.

The Shanghai-based electric car manufacturer’s equity closed Tuesday at $3.69, an increase of 5.73%.

The 4.5% notes have gained about 10 points outright in the past week.

Investors were showing more interest in the name after Tesla released its sales report, which indicated a strong demand for electric vehicles.

Qudian jumps

Qudian’s 1% convertible notes due 2026 were active on Tuesday with the notes improving on an outright and dollar-neutral basis, sources said.

The 1% notes gained more than 5 points outright to close Tuesday just shy of 112.875.

They were improving dollar-neutral alongside several other convertibles issued by China-based corporations, a market source said.

The Xiamen, China-based online consumer credit provider’s equity was also on the rise on Tuesday, closing the day at $8.89, an increase of 6.72%.

Qudian priced a $300 million issue of the 1% notes on June 27 with the greenshoe later exercised in full, lifting the size of the deal to $345 million.

Ares Capital in focus

Ares Capital’s 3.75% convertible notes due 2022 saw high volume activity on Tuesday.

The notes were trading just north of 102 early in the session and changed hands at 101.875 in the late afternoon, sources said.

Ares Capital stock closed Tuesday at $18.14, an increase of 0.44%.

While the notes saw more than $7 million in volume during Tuesday’s session, there were few actual trades with some large buyers and sellers in the market, a source said.

The notes carry an investment-grade rating.

Chegg active

Chegg’s 0.125% convertible notes due 2025 were again active on Tuesday.

While the notes were coming in on an outright basis, they continued to see improvement dollar-neutral.

The 0.125% notes were changing hands around 105.625 early in the session. They climbed to 106.5 in the late afternoon.

The notes have gained about 0.625 point dollar-neutral since Monday, a market source said.

Chegg stock traded as high as $43.08 and as low as $41.91 before closing the day at $42.87, an increase of 0.19%.

The notes traded north of 108 on Monday as the stock broke out to a new 52-week high.

Mentioned in this article:

Ares Capital Corp. Nasdaq: ARCC

Chegg Inc. NYSE: CHGG

Nio Inc. NYSE: NIO

Qudian Inc. NYSE: QD

Tesla Inc. Nasdaq: TSLA

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