Morning Commentary: Rivian outright gains continue; Wolfspeed jumps on supply agreement

By Abigail W. Adams

Portland, Me., July 5 – The convertibles secondary space saw an active start to the first full trading day of the third quarter with topical news moving the market on a mixed open for equities.

The Dow Jones industrial average was down 88 points, or 0.29%, the S&P 500 index was down 0.07%, the Nasdaq Composite index was up 0.07% and the Russell 2000 index was down 1.01% shortly before 11 a.m. ET.

There was $93 million in reported volume about one hour into the session with several convertible issuers seeing large movements as topical news drove stock higher.

Rivian Automotive Inc.’s 4.625% convertible notes due 2029 continued to climb to new outright highs with stock adding to the blockbuster gains of the previous session.

The 4.625% notes were up another 1.75 points outright in heavy volume.

The notes were changing hands at 126.125 versus a stock price of $19.75 early in the session.

There was $12 million in reported volume.

Rivian’s stock was seen at $19.60, an increase of 1.48%, shortly before 11 a.m. ET.

Rivian’s 4.625% notes have climbed more than 27 points over the past week with stock jumping more than 40%.

Stock was propelled higher by double digits on Friday following better-than-expected vehicle delivery numbers.

Wolfspeed Inc.’s convertible notes saw outsized moves to the upside early Wednesday after the company announced a new supply agreement that secured up to $2 billion in liquidity for the company.

Wolfspeed’s 1.875% convertible notes due 2029 climbed 7 points outright with stock up more than 13%.

The 1.875% convertible notes were changing hands at 84.875 versus a stock price of $63.51 early in the session.

There was $6 million in reported volume.

Wolfspeed’s 0.25% convertible notes due 2028 climbed 5 points outright.

The notes were trading at 82.5 versus a stock price of $63.90 early in the session.

There was $2 million in reported volume.

Wolfspeed’s stock was trading at $64.81, an increase of 14.40% shortly before 11 a.m. ET.

Wolfspeed’s stock was among the top performers early in Wednesday’s session after the company announced a supply agreement with Renesas.

Renesas agreed to deposit $2 billion with Wolfspeed to secure a 10-year supply of silicon carbide wafers.

Renesas will deposit an initial $1 billion with Wolfspeed with Wolfspeed given the option to request additional deposits of up to $1 billion in 2024.

The deposits will bear interest of 6%, which will be stepped up to either 10% or 15% under a supply shortage by the company with the agreement maturing on July 5, 2033, according to an 8-K filing with the Securities and Exchange Commission.

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