Morning Commentary: Convertibles secondary quiet as equities rally; iQIYI notes active

By Abigail W. Adams

Portland, Me., June 21 – It was a quiet return from the long holiday weekend in the convertible secondary space with few names on the tape as equity markets launched the session with strong gains.

The Dow Jones industrial average was up 605 points, or 2.01%, the S&P 500 index was up 2.74%, the Nasdaq Composite index was up 3.34% and the Russell 2000 index was up 2.76% shortly before 11 a.m. ET.

However, the rally in equities did not jolt trading activity in the secondary space with $50 million on the tape about one hour into the session.

iQIYI Inc.’s 4% convertible notes due 2026 were slightly improved in active trading.

The 4% notes were changing hands on a 67-handle early in the session.

They traded at 67.125 with the yield just shy of 25%, according to a market source.

There was $5 million in reported volume.

While not equity sensitive, iQIYI’s American Depositary Shares were trading at $4.68, an increase of 4.79%, shortly before 11 a.m. ET.

While there were no fresh headlines on Tuesday, news broke last week that parent company Baidu Inc. was in talks to sell its controlling stake in iQIYI in a deal that could be valued at $7 billion, Reuters reported.

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