Convertibles secondary market quiet; Snap broaches double par; Under Armour active

By Abigail W. Adams

Portland, Me., Oct. 26 – The convertibles secondary space launched the week with light trading volume as equities sold off on renewed concern about an uptick in Covid-19 cases and failed stimulus talks.

The Dow Jones industrial average closed the day down 650 points, or 2.29%, the S&P 500 was down 1.86% and the Nasdaq composite down 1.64%.

However, the volatility in equities did not spark much activity in the secondary space, which was holding firm in the face of the sell-off.

There was $46 million in reported volume about one hour into Monday’s session and $440 million on the tape at the market close, sources said.

Focus was on earnings with the week a heavy one for reports from convertibles issuers.

Snap Inc.’s convertible notes remained in focus on the heels of its blockbuster earnings report with both tranches trading up to double par.

Chegg Inc.’s convertible notes were again active with the education technology company slated to report earnings after the market close.

Under Armour Inc.’s 1.5% convertible notes due 2024 also saw renewed attention in the secondary space with earnings around the corner.

Snap at double par

Snap’s convertible notes remained in focus in the secondary space with both tranches broaching double par.

Snap’s 0.75% convertible notes due 2026 broke double par early in the session.

However, they came in alongside stock as the session progressed and were changing hands around 195 in the afternoon.

The bonds saw more than $11 million in reported volume.

Snap’s 0.25% convertible notes due 2025 were marked about double par early in the session.

They traded at 201.75 in the late afternoon.

There was more than $7 million on the tape during Monday’s session.

The notes are now essentially an equity surrogate, a market source said.

Snap’s stock traded to a high of $44.18 and a low of $40.91 before closing the day at $41.27, a decrease of 4.4%.

Snap’s convertible notes saw a meteoric rise alongside stock after Snap crushed analyst expectations with its earnings report last week.

Chegg’s earnings

Chegg’s convertible notes were once again active with the education technology company slated to report earnings after the market close.

Chegg’s 0.125% convertible notes due 2025 traded up to 180 with stock up early in the session.

They traded down to 176.25 versus a stock price of $86.42 in the late afternoon.

The 0% convertible notes due 2026 were changing hands at 109.25 versus a stock price of $86.50 in the late afternoon.

Chegg’s stock traded to a high of $89.99 and a low of $84.80 before closing the day largely flat at $86.69, a decrease of 0.081%.

The deep-in-the-money notes have been active since late last week as well.

Chegg reported earnings after the market close.

Under Armour eyed

Under Armour’s 1.5% convertible notes due 2024 were active on Monday, although sources queried were unsure about the source of the activity.

The notes rose 3 points outright to 148.5 in the late afternoon.

However, they were marked at 144.125 heading into the market close.

The bonds saw more than $10 million in reported volume.

Under Armour’s stock traded to a high of $12.69 and a low of $12.02 before closing the day at $12.23, a decrease of 4%.

The sports equipment company is slated to report earnings next Monday.

Mentioned in this article:

Chegg Inc. NYSE: CHGG

Snap Inc. NYSE: SNAP

Under Armour Inc. NYSE: UA

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