Cree convertibles gain on asset sale; ON Semiconductor, Wayfair active; Redfin contracts

By Abigail W. Adams

Portland, Me., Oct. 19 – The convertibles primary market was quiet on Monday, which is how it is expected to remain for most of the week as earnings season kicks into high gear.

Meanwhile, the secondary space was equally quiet early in the session as equities held steady on lingering hope for a stimulus deal.

However, activity picked up in the afternoon as equities sold off as the lingering hope dissipated.

The Dow Jones industrial average closed the day down 410 points, or 1.44%, the S&P 500 down 1.63% and the Nasdaq composite down 1.65%.

The technology sector was the most active sector in the convertibles universe as the tech-heavy Nasdaq plummeted.

Cree Inc.’s convertible notes were active and making gains as stock broke out to a new 52-week high on news of an asset sale.

Redfin Corp.’s 0% convertible notes due 2025 were coming in during their second day in the secondary space after skyrocketing on their debut.

ON Semiconductor Corp.’s convertible notes were again active although little changed on the day.

Wayfair Inc.’s 0.625% convertible notes due 2025 also saw some action as stock popped on an otherwise down day for the market.

While volume was light, SNAP Inc.’s convertible notes were making gains alongside stock on the eve of the company’s earnings report.

Cree gains

Cree’s convertible notes were making gains as stock broke out to a new 52-week high in intraday activity.

Cree’s 1.75% convertible notes due 2026 rose 6 points outright with stock up as much as 8% in intraday activity.

The 1.75% notes were changing hands at 173 Monday afternoon.

The 0.875% notes due 2023 rose 4 points outright to 137.125.

Stock traded to a new 52-week high of $77.19 and a low of $73.05 before closing the day at $73.93, an increase of 3.7%.

Stock soared after the manufacturer of lighting and power and radio frequency products announced that it was selling its LED products unit to Smart Global Holdings Inc. for $300 million, the company said in a press release.

Redfin day two

After skyrocketing on their aftermarket debut, Redfin’s 0% convertible notes due 2025 were coming in slightly their second day in the secondary space.

The notes were contracted about 0.125 point dollar-neutral at the market close, a source said.

Redfin’s stock traded to a high of $50.70 and a low of $48.06 before closing the day at $48.69, an increase of 0.6%.

The notes skyrocketed in the aftermarket on Friday, expanding as much as 3 points dollar-neutral, source said.

ON in focus

ON Semiconductor’s convertible notes were again active on Monday although the notes were little changed.

The soon-to-mature 1% convertible notes due Dec. 1, 2020 were changing hands at 141.75 with stock up slightly.

Stock traded to a high of $26.59 and a low of $25.96 before closing the day at $26.21, an increase of 0.54%.

The notes have been active since stock rallied about two weeks ago after activist investor Starboard Value took a stake in the company and rumors swirled about ON Semiconductor being a takeover candidate.

Several analysts raised their price target on the company around the same time, and the rally in stock has had staying power, which has lent credence to the rumors, a source said.

Wayfair active

Wayfair’s 0.625% convertible notes due 2025 were also active as stock popped on an overall down day for the market.

However, the notes were largely moving in line with stock, a source said.

Wayfair’s 0.625% convertible notes traded up to 105 early in the session as stock traded up to its intraday high.

They were changing hands at 103.875 in the late afternoon.

Wayfair’s stock traded to a high of $308.77 and a low of $297.57 before closing the day at $299.95, an increase of 0.97%.

Snap’s earnings

While volume was relatively light, Snap’s convertible notes were making gains alongside stock in the run up to the camera and social media company’s highly anticipated earnings report.

Snap’s 0.25% convertible notes due 2025 rose 3 points outright with stock up a little over 2%.

The 0.25% notes traded up to 150.

Snap’s 0.75% convertible notes due 2026 also gained about 3 points.

The 0.75% notes traded up to 148.

Snap’s stock traded to a high of $29.08 and a low of $28.25 before closing the day at $28.66, an increase of 3.02%.

Snap reports earnings after the market close on Tuesday.

Mentioned in this article:

Cree Inc. Nasdaq: CREE

ON Semiconductor Corp. Nasdaq: ON

Redfin Corp. Nasdaq: RDFN

SNAP Inc. NYSE: SNAP

Wayfair Inc. NYSE: W

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