Charter synthetic on tap; Luckin Coffee, China-based convertibles come in; Tesla active

By Abigail W. Adams

Portland, Me., Jan. 21 – The convertibles primary and secondary space were active in the return from the extended holiday weekend.

BofA Finance LLC plans to price $500 million 2.6-year cash-settled notes tied to Charter Communications Inc. after the market close on Wednesday with price talk for a reoffer price of 104, a coupon of 0% to 0.125% and an initial conversion premium of 22.5% to 25%, according to market sources.

Elanco Animal Health Inc. plans to sell $550 million, or 11 million, three-year par of $50 tangible equity units after the market close on Wednesday with price talk for a fixed dividend of 5% and a fixed conversion premium of 20%, according to a market source.

Goldman Sachs & Co. LLC, Citigroup Global Markets Inc., and J.P. Morgan Securities LLC are joint bookrunners for the registered offering.

BofA Securities Inc., Barclays, BNP Paribas Securities Corp., Mizuho Securities USA Inc., MUFG, Evercore ISI and Stifel, Nicolaus & Co. Inc. are also bookrunners.

While the secondary space was soft on Tuesday, there continued to be above-average trading volume.

“Volume’s been steady,” a market source said. “There’s been a lot of jiggering around of portfolios.”

Booking Holdings Inc.’s convertible notes were among the volume movers during Tuesday’s session as stock dropped as concern over the coronavirus spreading through China dragged down markets.

Following its massive run, Luckin Coffee Inc.’s 0.75% convertible notes due 2025 were coming in on Tuesday, as were most convertible notes issued by China-based companies, a market source said.

Trip.com Group Ltd.’s 1.99% convertible notes due 2025 dropped with its equity among the hardest hit in the space.

While the broader markets were down, Tesla Inc.’s convertible notes remained active and continued to move higher as stock continued its upward momentum during Tuesday’s session.

Booking Holdings active

Booking’s convertible notes topped the volume charts as stock got hit by the investor jitters caused by the coronavirus spreading through China.

The 0.9% convertible notes due 2021 were changing hands at 114.375 in the late afternoon.

More than $20 million of the bonds were on the tape during Tuesday’s session.

The soon-to-mature 0.35% convertible notes due June 15, 2020 also saw heavy volume with more than $15 million on the tape by the late afternoon.

The notes were changing hands at 151.375 early in the session and dipped to 150.5 by the late afternoon.

Booking Holdings’ stock closed Tuesday at $1,990.57, a decrease of 3.12%.

Contagion

Luckin Coffee’s 0.75% convertible notes due 2025 ended their massive run on Tuesday with the notes coming in alongside the broader market.

The 0.75% convertible notes dropped about 5 points outright. They were changing hands at 112.5 early in the session and slumped to 110.5 by the late afternoon.

The notes were contracted about 0.625 point on a dollar-neutral, or hedged, basis, a market source said.

The Beijing-based coffee shop chain’s ADS traded as high as $48.95 and as low as $46.68 before closing Tuesday at $47.66, a decrease of 4.72%.

The ADS of several China-based convertibles were taking a hit on Tuesday due to the quickly spreading coronavirus, which is believed to have originated in Wuhan and has made an appearance in Japan, Thailand and South Korea.

The United States had one confirmed case, the CDC confirmed.

Convertibles by China-based convertibles were down in general 0.25 to 0.375 point, a market source said.

Trip.com’s ADS were particularly hard hit as the virus spreads on the cusp of the Lunar New Year on Jan. 25, which is typically a travel-heavy holiday.

The Shanghai-based travel site’s 1.99% convertible notes due 2025 dropped about 3 points outright.

The 1.99% convertible notes were changing hands at 106.5 in the late afternoon.

Trip.com’s ADS were traded as low as $33.57 during Tuesday’s session but rebounded from their lows to close the day at $35.86, a decrease of 7.91%.

Tesla’s run

While the broader markets were down, Tesla’s convertible notes remained active and continued to move higher as stock continued its upward momentum.

The 2% convertible notes due 2024 traded up to 188.125 in the late afternoon. The 1.25% convertible notes due 2021 jumped to 156.625.

After passing $500 just last week, Tesla stock traded as high as $548.58 before closing Tuesday at $547.20, an increase of 7.19%.

Stock has steadily climbed since the electric car manufacturer opened its facility in Shanghai.

Mentioned in this article:

Booking Holdings Inc. Nasdaq: BKNG

Charter Communications Inc. Nasdaq: CHTR

Elanco Animal Health Inc. NYSE: ELAN

Luckin Coffee Inc. Nasdaq: LK

Tesla Inc. Nasdaq: TSLA

Trip.com Group Ltd. Nasdaq: TCOM

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