Convertibles secondary market trades higher with underlying shares; Booking notes active

By Rebecca Melvin

Concord, N.H., Aug. 23 – The convertibles market was trading mostly higher in line with underlying shares on Monday.

Equities rose. The Nasdaq Composite gained 227.99 points, or 1.5%, to 14,942.65; the Dow Jones industrial average was up 215.63 points, or 0.61%, to 35,335.71, and the S&P 500 index was up 37.86 points, or 0.9%, to 4,479.53.

The main name in convertibles trade in the early going was one that has been active for the last couple of days, an East Coast-based market source said.

Booking Holdings Inc.’s convertible notes continued to dominate trade as the travel technology company’s 0.9% tranche approaches maturity.

The 0.9% convertible notes due Sept. 15, 2021 traded up “pretty big” to about 103 bid, 103.5 offered, which was 1.75 points to 2 points higher on the day by late morning.

There was about $15 million of volume having changed hands in that issue shortly after 11.a.m. ET.

Booking’s stock, which had been up nearly 2% at late morning, bumped up further by the end of the day to $65.58, or 3%, to $2,137.32.

The Booking 0.75% convertible notes due 2025, which were not seen in trade early in the day, changed hands later during the session, also higher at 139, which was up from their previous 136 level.

There were also a “smattering” of other names trading on Monday, the market source said. The $800 million of 4% notes due 2026 of iQIYI Inc. changed hands at 78, which was up a point. And it was the second-most traded issue at late morning.

iQIYI’s 2% notes due 2025 also edged up, trading at 83.2, which was up 0.45 point. The Beijing-based online media company’s ADSs advanced 44 cents, or 5.3%, on Monday, closing at $8.77. The iQIYI convertibles slipped below par in early July.

The 0.625% convertible notes of Silicon Laboratories Inc., due in 2026, were up nearly a point at 140 against shares that were about $158.34. Silicon Labs’ stock closed the day at $158.00, which was flat on the day.

The semiconductor manufacturer is based in Austin, Tex.

No new issues were heard to have launched after the market close. Market players are anticipating that anything planned to price ahead of Labor Day, the unofficial end of summer, will be pricing this week, the market source said.

Market tone remains favorable. Last week’s new deals were mixed on their debut.

Opendoor Technologies Inc.’s $850 million 0.25% convertible notes due 2026 were flat on an outright and dollar-neutral basis on their first-day trading last Wednesday, and Upstart Holdings Inc.’s $575 million convertible notes due 2026 skyrocketed on their aftermarket debut on the same day, with the notes up 6 points outright and 3.75 points to 4 points dollar-neutral.

Meanwhile Cloudflare Inc., which priced $1.13 billion of 0% convertibles due 2026 the week before last, saw that paper trade on Monday at 99, which was up nearly a point. Cloudflare’s shares, which dropped last week, recouped $7.45, or 6.4%, on Monday to close at $124.18.

Other recent new deals that traded on Monday included Upwork Inc.’s $500 million 0.25% notes due 2026, which priced on Aug. 5, and which also traded up a point to 99. Shares of the San Francisco-based freelancing platform closed up 49 cents, or 1.2%, to $42.31.

Mentioned in this article:

Booking Holdings Inc. Nasdaq: BKNG

Cloudflare Inc. NYSE: NET

iQIYI Inc. Nasdaq: IQ

Opendoor Technologies Inc. Nasdaq: OPEN

Silicon Laboratories Inc. Nasdaq: SLAB

Upstart Holdings Inc. Nasdaq: UPST

Upwork Inc. Nasdaq: UPWK

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