Morning Commentary: onsemi convertible notes mixed as stock tanks in early trading

By Abigail W. Adams

Portland, Me., Oct. 30 – The convertibles secondary space saw a slow start to the day as equity markets recovered on a heavy week for macro news with the Federal Open Market Committee commencing its second-to-last meeting of 2023 on Tuesday.

The Dow Jones industrial average was up 257 points, or 0.79%, the S&P 500 index was up 0.53%, the Nasdaq Composite index was up 0.61% and the Russell 2000 index was up 0.24% shortly before 11 a.m. ET.

However, Treasury yields resumed their climb with the 10-year up 7 basis points to 4.9% shortly before 11 a.m. ET.

Markets have been volatile over the past month with rate and recession forecasts continually revised.

The convertibles secondary space was quiet early Monday with $47 million in reported volume as indecision continued to reign over markets.

However, earnings-related volatility continued to spark movement in the space.

onsemi’s convertible notes were mixed in active trade early in the session as stock tanked on the heels of weak guidance.

The high dollar price 0% convertible notes due 2027 fell outright but made large gains dollar-neutral as stock sank double digits.

The 0% convertible notes due 2027 were off 24 points outright to trade at 139 early in the session.

They expanded 2 to 2.5 points dollar-neutral on the move down, a source said.

onsemi’s 0.5% convertible notes due 2029 traded down to their lowest level since the $1.5 billion issue priced in February.

The notes sank about 11 points outright to trade at 91.25 early in the session.

They contracted 1 point on the move down, a source said.

The longer duration notes were under pressure with the pick-up in volatility not enough to compensate for the push out in the credit spread, the source said.

onsemi’s stock sank to $67.68, a decrease of 18.97%, shortly before 11 a.m. ET.

While onsemi beat on both the top and bottom lines with its third-quarter earnings, its weak forecast sparked heavy selling in the stock.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.