ViacomCBS, iQIYI convertibles in focus following Archegos Capital unwind; Ford improves

By Abigail W. Adams

Portland, Me., March 29 – The convertibles primary market was quiet on Monday as the market enters into the final days of a record-setting first quarter.

The primary market priced $41.74 billion over 77 deals in the past three months, according to the Prospect News database.

However, with equity markets turbulent amid rising 10-year Treasury yields, concern over inflation, and the rotation out of growth stocks, many of those deals took a hit in the secondary space.

ViacomCBS Inc.’s 5.75% series A mandatory convertible preferreds were pointed to as the worst performing deal of the first quarter.

The preferreds remained in focus on Monday with the company’s equity at the center of the block trades that rattled markets on Friday as Archegos Capital Management LLC unwound its positions.

The preferreds were trading off their lows even as the company’s stock continued to plummet following another block trade early in the session.

iQIYI Inc.’s convertible notes were also improved in active trading on Monday after plummeting on Friday due to the liquidation of Archegos Capital Management’s portfolio.

Meanwhile, Ford Motor Co.’s 0% convertible notes due 2026 were among the top volume movers of Monday’s session with the notes improved dollar-neutral, although they remained on a 99-handle.

Margin call

ViacomCBS’ 5.75% series A mandatory convertible preferred stock and iQIYI’s convertible notes improved in active trading on Monday following the block trades that rattled markets last Friday due to the eye-popping number of shares for sale and the double-digit losses it inflicted on the companies’ equity.

The block trades were later revealed to be the result of Archegos Capital Management unwinding its positions.

The hedge fund failed to meet margin calls on its highly leveraged positions resulting in the forced sale of the stock in its portfolio, the Wall Street Journal reported.

While the 5.75% series A mandatory convertible preferred stock was trading off its lows on Monday, the company’s class B common stock continued its descent with another block trade of 45 million shares pushed through early in the session.

The 5.75% series A mandatory convertible was changing hands at $64.50 early in Monday’s session, a source said.

They continued to gain and closed the day on a $65 handle.

The preferred stock is now listed for trade on the NasdaqGS under the symbol “VIACP.”

With the preferred stock now open to retail traders, it was improving, a source said.

ViacomCBS’ stock traded to a low of $43.00 and a high of $48.00 before closing the day at $45.01, a decrease of 6.68%.

Meanwhile, iQIYI’s convertible notes also improved in active trading on Monday after taking a hit last Friday.

iQIYI’s ADSs were a part of Friday’s selling spree, which drove the convertible notes down about 20 points outright and the ADSs down 13.2% at Friday’s close.

The Beijing-based online media company’s 2% convertible notes gained about 3 points outright.

They were changing hands around 92 in the late afternoon after closing last Friday at 89.

iQIYI’s 4% convertible notes due 2026 were up almost 5 points outright.

They were changing hands at 103.25 in the late afternoon after trading as low as 98 last Friday.

The majority of trades were outright, a source said.

iQIYI’s ADSs wavered between gains and losses on Monday before closing firmly in the red.

The ADSs traded as high as $18.49 and a low of $16.00 before closing the day at $16.55, a decrease of 5.05%.

Ford better

Ford’s 0% convertible notes due 2026 improved in high-volume activity on Monday.

While the 0% notes remained on a 99-handle, they were posting gains on a dollar-neutral basis.

The notes were seen changing hands at 99.5 in the late afternoon.

They were up 0.375 point dollar-neutral, a source said.

Ford’s stock traded to a high of $12.36 and a low of $12.06 before closing the day at $12.15, a decrease of 1.22%.

Mentioned in this article:

iQIYI Inc. Nasdaq: IQ

Ford Motor Co. NYSE: F

ViacomCBS Inc. Nasdaq: VIAC

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