NIO convertibles rally on cash infusion; merger sends Alteryx up; U.S. Steel rockets higher

By Cristal Cody

Tupelo, Miss., Dec. 18 – NIO Inc.’s convertible notes rallied over 5 points to 6 points in the space’s most active secondary issues after the company reported a $2.2 billion investor cash infusion.

The 3.875% convertible notes due 2029 were more than 6 points better by the close after adding more than 5 points over the morning.

NIO’s 4.625% convertible notes due 2030 also rose more than 5 points on $14 million of paper changing hands Monday.

“This is just bulking up the balance sheet, which is always a positive for bondholders,” a source said.

Overall market tone was mostly positive Monday in the run-up to Christmas Day.

The S&P 500 index closed up 0.45%, the Dow Jones industrial average pulled back to finish flat, while the Nasdaq improved 0.62%. The Russell 2000 was the lone index in the red and closed off 0.14%.

Treasury yields were up 1 basis point to 4 bps on the long end by the day’s end.

Just over an hour into the session, less than $75 million of convertible bonds had traded. By the close, the day had around $701 million of convertible secondary supply.

Trading also increased significantly in Alteryx, Inc.’s 1% convertible notes due 2026 with the notes climbing over 7 points on more than $21 million of secondary action after the company reported it will be acquired by global private equity firms Clearlake Capital Group, LP and Insight Partners for $4.4 billion in cash and debt.

The notes jumped nearly 7 points by an hour into the session, but overall activity was light with just odd lots traded, a source said.

“Those bonds should be trading on a risk-off basis,” the source noted.

Meanwhile, United States Steel Corp.’s 5% convertible notes due 2026 (B1/BB-) shot up over 81 points during the session after the morning’s merger announcement with Nippon Steel Corp.

NIO paper stronger

NIO’s 3.875% convertible notes due 2029 picked up another point over the afternoon to head out over 6 points better on the day at 100.05 versus an equity price of $8.38, a source said.

The issue led the day’s supply with nearly $23 million of paper traded.

Just over an hour into the session, the bonds traded over 5 points higher at a print of 99.123 versus an equity price of $8.51 on $6 million of volume.

NIO’s 4.625% convertible notes due 2030 also rose more than 5 points to a 99 handle versus an equity price of $8.38 on $14 million of paper changing hands by the close.

NIO reported Monday that it entered into a share subscription agreement with CYVN Holdings LLC through its Abu Dhabi-based investment vehicle CYVN Investments RSC Ltd. investing $2.2 billion in cash to subscribe for 294 million new shares of class A stock at a share price of $7.50 in a deal expected to close next week.

The Shanghai-based smart electric vehicle manufacturer previously reported that in July it received a $738.5 million equity investment from CYVN, which also acquired an aggregate $350 million of NIO class A shares from an affiliate of Tencent Holdings Ltd.

Following the latest December investment, CYVN will own around $20.1% of NIO’s stock.

NIO’s common stock closed the day 4.64% higher at $8.35 on more than 130 million shares traded. Average volume in the stock is just under 47 million shares. Shares traded at $8.23 to $8.64 over the session.

Alteryx improves

Alteryx’s 1% convertible notes due 2026 traded 7.125 points better at just under 97.125 versus an equity price of $47.37 by late Monday, according to a market source.

Overall secondary supply climbed to $21.99 million by the close after only $2 million of volume was reported over the morning.

The issue had traded nearly 7 points better at just under 97 versus an equity price of $47.05 in odd lots about an hour after the session got underway.

Alteryx reported that it will become a private company after the acquisition by Clearlake and Insight Partners, which is expected to close in the first half of 2024.

Shareholders will receive $48.25 per share in cash for each share of the Irvine, Calif.-based data analytics firm’s class A or class B common stock.

Alteryx stock dropped 1.6% on the day to $47.27 on more than 17 million shares traded versus an average volume of around 2 million shares. Shares traded as low as $46.90 and as high as $47.40 over the session.

U.S. Steel jumps

United States Steel’s 5% convertible notes due 2026 (B1/BB-) shot up over 81 points Monday to 374.13 versus an equity price of $49.52, a source reported.

While secondary trading was heavier in other names during the session, the issue was active on around $7 million of volume.

Nippon Steel said Monday it will acquire United States Steel in a cash and debt deal valued at $14.9 billion.

Shareholders will receive $55 per share in cash with the transaction expected to close in the second or third quarter of 2024. Nippon said it plans to fund the acquisition through proceeds mainly from borrowings from certain Japanese banks and has already secured financing commitments.

United States Steel shares closed up 26.09% to $49.59 on volume that soared to more than 69 million shares. Average volume in the stock is around 5 million shares. The stock traded from $49.24 to $50.20 over the day.

Mentioned in this article:

NIO Inc. NYSE: NIO

Alteryx, Inc. NYSE: AYX

United States Steel Corp. NYSE: X

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