Convertibles secondary market quiet; ON Semiconductor in focus; Wayfair, Okta active

By Abigail W. Adams

Portland, Me., Sept. 6 – It was a slow return from the holiday weekend with the convertibles primary market dormant and the secondary space quiet on a choppy day for equity markets.

A green open for equities quickly gave way to selling with indexes in the red as Treasuries “got slaughtered,” a source said.

While equities attempted a rebound and turned mixed in intraday activity, they closed in the red.

The Dow Jones industrial average closed Tuesday down 173 points, or 0.55%, the S&P 500 index closed down 0.41%, the Nasdaq Composite index closed down 0.74% and the Russell 2000 index closed down 0.96%.

Treasury yields continued to march higher on Tuesday with the 10-year yield settling at 3.342%.

However, it did little to move the needle in the secondary space.

While the market was weaker, “there haven’t really been any outsized moves that caused any priming one way or another,” a source said.

There was $39 million on the tape about one hour into the session and $323 million in reported volume about one hour before the market close.

ON Semiconductor Corp.’s 0% convertible notes due 2027 were among the top traded issues of Tuesday’s session with the notes down outright alongside stock.

Wayfair Inc.’s 1% convertible notes due 2026 were also active with the notes range bound in the low 70s.

Okta Inc.’s 0.125% convertible notes due 2025 also saw a fresh round of activity although with little movement in price.

ON Semiconductor eyed

ON Semiconductor’s 0% convertible notes due 2027 were the top traded issue of Tuesday’s session with the notes lower alongside stock.

The 0% convertible notes were off 1.5 points outright with stock down more than 2%.

The notes were changing hands at 140.125 versus a stock price of $65.93 in the late afternoon.

There was $12 million in reported volume.

ON Semiconductor’s stock traded to a high of $67.79 and a low of $65.03 before closing the day at $66.05, a decrease of 2.16%.

Wayfair range bound

Wayfair’s 1% convertible notes due 2026 remained range bound in active trading on Tuesday.

The convertible notes were changing hands on a 71-handle in the late afternoon.

They traded at 71.375 versus a stock price of $48.83, according to a market source.

The yield was now just shy of 10%.

There was $11 million in reported volume.

Wayfair’s 0.625% convertible notes due 2025 also saw some activity with little price movement.

The 0.625% notes were seen at 70.875 in the late afternoon with the yield 12.375%.

Wayfair’s stock traded to a high of $50 and a low of $47.06 before closing the day at $48.46, a decrease of 2.46%.

Wayfair’s 1% convertible notes have been stuck in a tight range the past two weeks after broaching 80 in mid-August when the market rally was at its peak

The notes have traded on either side of 71 since Aug. 22, according to Trace data.

Wayfair’s 0.625% notes have held onto some gains from the early August rally after bottoming out at 65 in July.

The notes were changing hands on a 73-handle about two weeks ago before selling pressure returned to equities.

Okta little moved

Okta’s 0.125% convertible notes were active although the notes also saw little movement in price.

The 0.125% notes were trading at 86.125 versus a stock price of $62.80.

The yield on the notes was about 5.125%.

The notes were seen at 80.875 versus a stock price of $60.95 in the late afternoon with the yield rising to 5.375%.

There was $9 million in reported volume.

Okta’s stock traded to a high of $64.78 and a low of $60.52 before closing the day at $60.66, a decrease of 6.14%.

Mentioned in this article:

Okta Inc. Nasdaq: OKTA

ON Semiconductor Corp. Nasdaq: ON

Wayfair Inc. NYSE: W

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