Morning Commentary: Convertibles secondary launches new quarter slowly; Pinduoduo eyed

By Abigail W. Adams

Portland, Me., April 1 – The convertibles secondary space launched the first day of the second quarter slowly with trading activity again muted early in the session.

Equity indexes were again wavering between gains and losses early Friday although they were turning positive as the session progressed.

The Dow Jones industrial average was down 11 points, or 0.04%, the S&P 500 index was up 0.10%, the Nasdaq Composite was up 0.42% and the Russell 2000 index was up 0.70% shortly before 11 a.m. ET.

There was $45 million in reported volume about one hour into the session with only one name seeing more than $5 million in reported volume.

Pinduoduo Inc.’s 0% convertible notes due 2025 were in focus with the notes recouping their losses from the previous session.

The 0% convertible notes gained 1.5 points outright to return to an 89-handle.

The notes were changing hands just shy of 89.5 early Friday with a yield of 6.833%.

There was $8 million in reported volume.

Pinduoduo’s American Depositary Shares were trading at $43.94, an increase of 9.55%, shortly before 11 a.m. ET.

The ADR space was strong again on Friday after news reports that Beijing was considering allowing the United States to have access to the audits of its U.S. listed companies.

China-based convertible notes were under pressure on Thursday as delisting concerns were again sparked by tough statements from Chinese regulators and the SEC flagging convertible issuer iQIYI Inc. for its use of an auditor that could not be inspected by U.S. regulators.

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