Morning Commentary: iQIYI convertibles remain in focus; Euronet Worldwide notes active

By Abigail W. Adams

Portland, Me., March 28 – With no new deals announced, the convertible secondary market continued to focus on iQIYI Inc.’s newly priced 2% convertible notes due 2025.

The 2% notes rebounded on an outright basis. They were trading up to 101.5 early in Thursday’s session after dropping down to 100.75 Wednesday afternoon.

However, the 2% notes were largely unchanged dollar-neutral and maintained the 2-point dollar-neutral expansion seen out of the gate.

iQIYI’s stock was $22.59, a decrease of 0.55%, early in the session.

While the overall space was quiet early Thursday, Euronet Worldwide Inc.’s 0.75% convertible notes due 2049 were active with the notes continuing to post gains.

The 0.75% notes were seen at 107.25 bid, 108 offered versus a stock price of $142.00 early in the session, a market source said.

The notes have expanded 6.5 points dollar-neutral since hitting the secondary space in mid-March.

“And it will stay that way,” unless something dramatic happens or the notes hit the 130s and outright accounts sell them, the source said.

Euronet Worldwide is an investment-grade company with a good story, the source said. The notes have been sought after since they hit the secondary market.

While iQIYI’s offering is shaping up to be the sole deal of the week, the market is ripe for new issuance, a market source said.

There has not been a lot of selling taking place to make room for new paper, an indication there is money ready and willing to be put to work, the source said.

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