Travere Therapeutics convertibles tick higher; China-based issuers under pressure

By Abigail W. Adams

Portland, Me., March 10 – It was a relatively quiet day in the convertibles secondary space as selling pressure returned to equities with optimism about a ceasefire in the Ukraine fading.

While indexes closed well off their lows, they remained in the red with the Dow Jones industrial average ending the day down 112 points, or 0.34%, the S&P 500 index down 0.43%, the Nasdaq Composite down 0.95%, and the Russell 2000 index down 0.23%.

There was $62 million in reported volume about one hour into the session and $450 million on the tape at the market close.

The convertible notes of several China-based companies were taking a hit in active trading on renewed delisting concerns.

Pinduoduo Inc.’s 0% convertible notes due 2025 were the most actively traded name of the day with the notes lower on an outright and dollar-neutral basis.

iQIYI Inc.’s 2% convertible notes due 2025 and Bilibili Inc.’s 0.5% convertible notes due 2026 were also under pressure in active trading.

Meanwhile, Travere Therapeutics Inc.’s 2.25% convertible notes due 2029 remained active with the notes continuing to improve on an outright and dollar-neutral basis their second day in the secondary space.

China-based convertibles

The convertible notes of several China-based companies were under pressure as their equity tanked on renewed delisting fears.

Pinduoduo’s 0% convertible notes due 2025 were the most actively traded issue in the secondary space.

The 0% notes continued to trade on an 86-handle with the company’s equity off more than 15%.

The notes were changing hands at 86.625 early in the session.

They were trading at 86.25 versus an equity price of $35.96 in the late afternoon.

The notes have a light delta. However, they contracted about 0.75 point dollar-neutral, a source said.

The convertibles largely trade for their yield, which was 8.82% heading into the market close.

There was $23 million in reported volume.

Pinduoduo’s American Depositary Shares traded to a high of $39.83 and a low of $35.02 before closing the day at $35.76, a decrease of 17.49%.

iQIYI’s 2% convertible notes due 2025 “got crushed” with the notes down more than 5 points outright, sources said.

They were changing hands at 80 heading into the market close with a yield of about 9.75%.

iQIYI’s ADS traded to a high of $3.89 and a low of $2.94 before closing the day at $3.21.

Bilibili’s 0.5% convertible notes due 2026 fell about 3 points outright.

The notes were trading at 69.375 heading into the market close with the yield 14.5%.

There was $15 million in reported volume.

Bilibili’s ADS traded to a high of $22.82 and a low of $21.32 before closing the day at $21.68, a decrease of 14.10%.

The ADS of China-based companies were under pressure on renewed delisting fears after the Securities and Exchange Commission named five Chinese companies that may be delisted under the Holding Foreign Companies Accountable Act.

There is a standard clause in the indenture of convertible notes that require them to become putable at par upon a delisting event.

However, the question then becomes whether the companies have enough on the books to meet their obligations, a source said.

Travere day two

Travere Therapeutics continued to improve their second day in the secondary space.

The 2.25% notes traded up to 106 versus a stock price of $25.77 early in the session.

They were changing hands at 105.4 versus a stock price of $25.06 in the late afternoon.

The notes expanded another 0.75 point dollar-neutral, a source said.

There was about $10 million in reported volume.

Travere’s stock traded to a low of $24.53 and a high of $25.77 before closing the day at $25.42, an increase of 1.19%.

The notes saw a strong start in the aftermarket and expanded about 2 points during Wednesday’s session.

Mentioned in this article:

Bilibili Inc. Nasdaq: BILI

iQIYI Inc. Nasdaq: IQ

Pinduoduo Inc. Nasdaq: PDD

Travere Therapeutics Inc. Nasdaq: TVTX

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