Morning Commentary: Convertibles primary, secondary quiet; Etsy active; Nio gains

By Abigail W. Adams

Portland, Me., Aug. 4 – The convertibles primary and secondary markets saw another slow start to the day with no new deals announced and trading volume light.

There was $67 million in reported volume a little over one hour into Tuesday’s session, according to a market source.

However, few names saw concentrated trading activity.

Etsy Inc.’s 0.125% convertible notes due 2026 were active early in the session with the notes trading up alongside stock on the eve of the e-commerce company’s second-quarter earnings report.

The 0.125% notes were up 2.25 points outright to change hands at 161, according to a market source.

There were more than $5 million of the bonds on the tape early in the session.

Etsy stock traded to a high of $129.70 early in the session but was changing hands at $127.44, an increase of 0.65%, shortly before 11 a.m. ET.

With Amazon smashing its earnings estimates as consumers turned to e-commerce companies at the height of the Covid-19 pandemic, analysts are also expecting strong second-quarter results from Etsy.

While volume was light, Nio Inc.’s 4.5% convertible notes due 2024 jumped as stock continued its upward momentum following a better-than-expected July delivery report.

The 4.5% notes traded up to 162.375 with equity up another 3% on Tuesday after a 13% surge on Monday.

Nio’s American Depositary Shares were changing hands at $14.10, an increase of 3.71%, shortly before 11 a.m. ET.

The convertible notes from the Shanghai-based electric car manufacturer saw a dramatic rebound in recent months as electric cars gain popularity with consumers.

The notes have been in distressed territory for most of the year and were trading in the 50s as recently as May, according to Trace data.

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