Sea convertibles in focus, improve; Pinduoduo notes active; DISH jumps; Lumentum gains

By Abigail W. Adams

Portland, Me., Dec. 18 – While the convertibles primary market is most likely done for the year, the secondary space continued to see decent trading volume on Wednesday.

Outright accounts were continuing to take profits from a stellar year, and money on the sidelines was being put to work, sources said.

There was about $73.5 million on the tape a little over one hour into Wednesday’s session and $451 million in reported volume by the late afternoon.

Convertibles from ADR issuers were topping the volume charts, a market source said.

Sea Ltd.’s 1% convertible notes due 2024 were in focus with the notes down outright but improving on a dollar-neutral, or hedged, basis.

Pinduoduo Inc.’s 0% convertible notes due 2024 also saw renewed attention in the secondary space with the notes also improved on a dollar-neutral basis.

Lumentum Holdings Inc.’s 0.5% convertible notes due 2026 remained major volume movers with the notes again on the rise.

DISH Network Corp.’s convertible notes also saw some activity with the notes jumping after the satellite broadcaster detailed plans for its wireless network.

ADRs eyed

The convertible notes from two of the largest non-U.S. issuers were active on Wednesday with both improving as the underlying equity traded down.

Sea’s 1% convertible notes due 2024 again saw high-volume activity.

The 1% notes were trending lower alongside equity after trading up to 106 during Tuesday’s session. However, they were improving dollar-neutral.

The notes were seen changing hands at 105.125 with the underlying equity down about 2% early in the session. They rose to 105.5 as equity pared its losses.

The notes gained about 0.25 to 0.5 point on a dollar-neutral basis, a market source said.

The notes saw more than $20 million in reported volume.

The American Depositary Receipts from the Singapore-based digital services company traded as low as $36.80 and as high as $38.02 before closing the day at $37.61, a decrease of 1.03%.

Pinduoduo’s 0% convertible notes due 2024 also saw renewed attention in the secondary space.

The notes were changing hands at 115 with equity down about 3% early in the session, according to a market source.

The notes were slightly improved on a dollar-neutral basis, a source said.

The Shanghai-based e-commerce platform’s ADRs traded to a low of $37.16 and a high of $38.85 before closing the day at $37.72, a decrease of 2.56%.

Sea’s 1% convertible notes and Pinduoduo’s 0% convertible notes were the largest issues from foreign-based corporations in 2019 with both issues $1 billion.

Lumentum gains again

Lumentum’s 0.5% convertible notes due 2026 remained major volume movers in the secondary space with the notes again on the rise.

The 0.5% notes continued to trade on a 105 handle and were seen changing hands at 105.5 with stock off early in Wednesday’s session.

The notes expanded another 0.25 to 0.5 point, a market source said.

Lumentum stock traded to a low of $73.95 and a high of $76.12 before closing the day at $75.99, an increase of 0.45%.

The 0.5% notes have been major volume movers since hitting the secondary space on Dec. 10.

While the notes saw a lackluster debut, they have steadily gained on both an outright and dollar-neutral basis since.

DISH jumps

DISH’s 3.375% convertible notes due 2026 were among the volume leaders of Wednesday’s session with the notes making large gains after the satellite broadcaster detailed plans for its wireless network.

The 3.375% notes rose 2 points outright to 97. They were improved about 1 point dollar-neutral, according to a market source.

The 3.375% notes saw more than $15 million in reported volume by the late afternoon.

While less active, DISH’s 2.375% convertible notes were also making gains.

The notes were changing hands at 91.375 in the mid-afternoon and were also improved about 1 point dollar-neutral, sources said.

DISH stock traded to a low of $34.71 and a high of $36.31 before closing the day at $35.61, an increase of 3.31%.

DISH stock was on the rise after CEO Charlie Ergen took the stand to defend the T-Mobile-Sprint merger, which is being challenged by the attorneys general of several states.

Ergen affirmed DISH’s ability to become a competitive wireless network provider if the T-Mobile-Sprint merger is approved.

He stated that DISH had received a $10 billion letter of credit from Morgan Stanley, JPMorgan and Deutsche Bank to help build the network.

DISH bought divested assets from T-Mobile and Sprint with the intention of establishing its own wireless network to help T-Mobile and Sprint win regulatory approval for their merger, which hinged on the creation of a viable competitor.

Mentioned in this article:

DISH Network Corp. Nasdaq: DISH

Lumentum Holdings Inc. Nasdaq: LITE

Pinduoduo Inc. Nasdaq: PDD

Sea Ltd. NYSE: SE

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