Morning Commentary: Losses mount for iQIYI, Pinduoduo convertible notes

By Abigail W. Adams

Portland, Me., March 14 – Losses continued to mount for the convertible notes of China-based companies early Monday as delisting fears coupled with Beijing’s regulatory crackdown continued to drive down their equities.

Pinduoduo Inc.’s 0% convertible notes due 2025 continued to trend lower in heavy volume.

The 0% convertible notes fell another 1 point outright to trade at 85 early in Monday’s session.

Pinduoduo’s American Depositary Shares traded down to $30.09, a decrease of 6.33%, shortly before 11 a.m. ET.

iQIYI Inc.’s 2% convertible notes due 2025 fell 4 points outright to change hands at 76 with the yield now 11.57%, according to a market source.

The Beijing-based online entertainment service provider’s 4% convertible notes due 2026 fell 8 points outright to 65 with the yield now 14.331%.

iQIYI’s ADSs were changing hands at $2.33, a decrease of 16.01%, shortly before 11 a.m. ET.

The continued pressure on China-based convertible notes comes amid news Tencent Holdings Ltd. is facing a record fine related to its mobile payments network, the Wall Street Journal reported.

The news comes amid a broad sell-off in Asian markets with the Hang Seng index down about 5% on Monday.

Pinduoduo’s and iQIYI’s convertible notes were under pressure the previous week as the Securities and Exchange Commission ramped up its delisting threat to China-based companies.

While the convertible notes have long been busted, iQIYI’s 2% convertible notes were trading at 85 prior to last Thursday when delisting concerns sparked a sell-off in the name.

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