Morning Commentary: NXP Semiconductors convertibles eyed; Chegg expands post-earnings

By Abigail W. Adams

Portland, Me., April 30 – The convertibles secondary space was active early in Tuesday’s session with earnings related news pushing outstanding issuance into the spotlight.

NXP Semiconductors NV’s 1% convertible notes due Dec. 1, 2019 were in focus as stock soared post-earnings.

The 1% convertible notes were making gains on an outright basis and were either slightly improved or slightly contracted dollar-neutral based on the delta used, a market source said.

The 1% notes were up 3.5 points outright and were changing hands around 110.375.

The notes were contracted about 0.375 point to 0.5 point on a dollar-neutral, or hedged, basis based on the theoretical delta, a market source said.

However, the notes may have expanded based on the market delta with people playing the name with a lighter hedge due to the short-duration of the notes.

The 1% notes were the most actively traded during Tuesday’s session with $15 million in reported volume about one hour into the session.

Despite the short lifespan of the notes, there was a good mix of outright and swap trades.

About ¼ of the trades early in the session were on swap, a source said.

NXP Semiconductors’ stock was changing hands at $105.10, an increase of 7.26%, shortly before 11 a.m. ET.

Stock soared following NXP’s first-quarter earnings report.

Chegg Inc.’s 0.125% convertible notes due 2025 also saw high-volume activity following the education technology company’s first-quarter earnings report.

The 0.125% notes dropped about 3 points outright to change hands at 97. However, the notes expanded about 0.5 point to 0.625 point on the move down, a market source said.

There were several swap trades on the tape.

The 0.125% notes were also expanding during Monday’s session in the run up to the earnings report with the notes improved about 0.25 point dollar-neutral, a market source said.

Chegg stock traded down to $36.45, a decrease of 8.21%, shortly before 11 a.m. ET.

Stock tanked despite an earnings beat on both the top and bottom line.

Chegg reported earnings per share of 15 cents versus analyst expectations of earnings per share of 12 cents.

Revenue was $97.4 million versus analyst expectations for revenue of $94.8 million.

© 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.