Convertibles secondary market ‘rips’ higher; iQIYI in focus; Coupa, Okta, Zendesk gain

By Abigail W. Adams

Portland, Me., June 16 – The convertibles primary market remained dormant on Tuesday with no deals launching despite a surge in equities following a better-than-expected retail sales report.

However, the secondary space saw an uptick in activity.

“The market’s just ripping,” a source said.

The Dow Jones industrial average closed the day up 2.04%, the S&P 500 index up 1.9% and the Nasdaq composite up 1.75%.

There was $157.5 million on the tape about one hour into the session and $837 million shortly before the market close.

Several recent deals were making gains on an outright and dollar-neutral basis.

Among them were Coupa Software Inc.’s 0.375% convertible notes due 2026, Okta Inc.’s 0.375% convertible notes due 2026 and Zendesk Inc.’s 0.625% convertible notes due 2025 – the recent megadeals from the tech sector.

iQIYI Inc.’s outstanding convertible notes returned to focus on Tuesday with the notes surging on an outright basis as stock shot up more than 20%.

Making gains

Coupa’s 0.375% convertible notes due 2026 were on the rise in high-volume activity on Tuesday.

Coupa’s notes rose more than 3 points outright to trade to a high of 107 in the late afternoon.

They expanded about 1.5 points dollar-neutral, a source said.

There was more than $28 million in reported volume heading into the market close.

Coupa stock traded to a high of $249.02 and a low of $237.42 before closing the day at $247.75, an increase of 3.93%.

Okta’s 0.375% convertible notes were also improving dollar-neutral, although they were relatively flat on an outright basis.

Okta’s 0.375% notes continued to trade around 102.375 with stock down in intraday trading.

The notes expanded about 0.5 points dollar-neutral, a source said.

There was more than $26 million in reported volume heading into the market close.

Okta stock traded to a low of $181.40 and a high of $189.60 before closing the day at $188.10, an increase of 0.35%.

Zendesk’s 0.625% convertible notes due 2025 climbed to a 103-handle late Tuesday.

The notes were up more than 2.5 points outright to 103.75 in the late afternoon, according to a market source.

The bonds saw more than $16 million in reported volume heading into the market close.

Zendesk stock traded to a low of $81.62 and a high of $83.75 before closing the day at $82.52, an increase of 2.85%.

Coupa, Okta and Zendesk each brought deals of $1 billion or more the previous week. The deals had similar terms and each involved a privately negotiated buyback or exchange of outstanding convertible notes.

iQIYI in focus

iQIYI’s outstanding convertible notes returned to focus on Tuesday with the notes surging on an outright basis as stock shot up more than 20%.

The Beijing-based online video platform’s 3.75% convertible notes due 2023 jumped more than 23 points outright to change hands at 120 early Tuesday, a market source said.

They came in alongside stock heading into the market close to change hands at 114.25.

The bonds saw more than $21 million in reported volume during Tuesday’s session.

The notes were previously trading on a 97-handle.

The 2% convertible notes due 2025 rose 20 points to trade at 105.375 early in the session, the source said.

They were changing hands at 103.75 shortly before the market close with more than $40 million in reported volume.

They last traded at 86, according to Trace data.

iQIYI’s American Depositary Shares traded as high as $26.45 and a low of $22.59 before closing the day at $24.10, an increase of 25.85%.

Shares skyrocketed after Reuters reported that Tencent Holding Ltd. was interested in becoming the largest shareholder of iQIYI and had approached majority shareholder Baidu Inc. about buying a stake.

Mentioned in this article:

Coupa Software Inc. Nasdaq: COUP

iQIYI Inc. Nasdaq: IQ

Okta Inc. Nasdaq: OKTA

Zendesk Inc. NYSE: ZEN

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.