Morning Commentary: Luckin Coffee convertible rebounds slightly; Insmed jumps outright

By Abigail W. Adams

Portland, Me., Feb. 3 – The convertible secondary space launched the week with decent trading volume as equity markets rebounded from Friday’s coronavirus induced sell-off.

There was $68 million on the tape about one hour into Monday’s session. However, trading activity continued to be dominated by the usual suspects – Luckin Coffee Inc. and Tesla Inc.

Luckin Coffee’s 0.75% convertible notes due 2025 again topped the volume charts with the notes improving as equity rebounded.

The 0.75% notes were changing hands at 87.5 early in the session, a market source said. The Beijing-based coffee shop chain’s ADS traded up to $34.26, an increase of 5.45%, shortly before 11 a.m. ET.

In addition to concern surrounding the coronavirus ripping through China, Luckin’s equity and convertible notes sold off on Friday following a short-seller battle on Twitter.

Muddy Waters Capital announced they were shorting the company due to alleged financial improprieties.

However, Citron Research disputed those allegations and announced they were long in the company.

Meanwhile, Tesla’s convertible notes continued to climb in high volume activity as stock shot past $700 early in Monday’s session.

The 2% convertible notes due 2024 rose to 240.75 with more than $10 million in reported volume.

The 2.375% convertible notes due 2022 traded up to 221.375. And the 1.25% convertible notes due 2021 topped double par and were changing hands just north of 200 shortly before 11 a.m. ET.

Tesla stock climbed as high as $735.00 early Monday and was changing hands at $718.74, an increase of 10.45%, shortly before 11 a.m. ET.

While the usual suspects continued to dominate the tape, one name, which is typically slow to trade, was also a major volume mover on Monday.

Insmed Inc.’s 1.75% convertible notes due 2025 jumped on an outright basis as stock skyrocketed following positive clinical results.

The 1.75% convertible notes rose more than 10 points outright in the high-volume activity.

They were changing hands at 104.5 early in the session.

Insmed stock traded as high as $30.44 shortly before the opening bell and was trading at $27.66, an increase of 34.64%, shortly before 11 a.m. ET.

Stock skyrocketed after the biotech company announced positive results from its phase 2 study for a treatment of bronchiectasis.

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