Cytokinetics convertibles rise; Booking notes active; JPMorgan, BofA synthetics trade

By Abigail W. Adams

Portland, Me., July 5 – It was a quiet return from the long weekend in the convertibles secondary space with equity markets launching the first full trading week of the second half of 2022 with more volatility.

While equity indexes launched the day with heavy selling, buyers returned to the space mid-session with tech and small cap stocks leading gains.

The Dow Jones industrial average closed the day down 129 points, or 0.42% although the index was well off its lows from early in the session.

The S&P 500 index fought back from an almost 2% decline to close the day up 0.16%; the Nasdaq Composite index fought back from a 1.5% decline to close the day up 1.75% and the Russell 2000 index clawed back from an almost 2.5% decline to close the day up 0.79%.

However, the convertibles secondary space once again sat out the rally with the market still better to sell, a source said.

Convertibles trading volume was light with $47 million in reported volume about one hour into the session and $296 million on the tape about one hour before the market close.

New paper and repositioning were the driving forces of trading activity in the space.

Cytokinetics Inc.’s 3.5% convertible notes due 2027 remained active with the notes continuing to add on an outright and dollar-neutral basis after a strong aftermarket debut last Friday.

Booking Holdings Inc.’s 0.75% convertible notes due 2025 (A3/A-) were active early in the session although activity in the name petered out as the session progressed.

Short-duration synthetic paper also continued to see heavy volume as the notes switched hands closer to their maturity.

BofA Finance LLC’s 0.125% cash-settled notes tied to Charter Communications Inc. due Sept. 1, 2022 and JPMorgan Chase Financial Co. LLC’s 0.25% cash-settled equity-linked notes due 2023 tied to Voya Financial, Inc. were among the top traded issues during Tuesday’s session.

Cytokinetics gains

Cytokinetics’ 3.5% convertible notes due 2027 continued to rise on an outright and dollar-neutral basis after a strong aftermarket debut last Friday.

The notes rose another 3.25 points outright with stock up 7%.

They were changing hands at 105.75 versus a stock price of $41.33 early in the session, according to a market source.

They jumped to a 108-handle with stock lifted mid-session and were seen at 108.5 versus a stock price of $43.38 heading into the market close.

The notes added another 0.5 point dollar-neutral.

There was $16 million in reported volume.

Cytokinetics’ stock traded to a low of $40.18 before closing the day at the session high of $43.90, an increase of 7.07%.

The notes had a strong aftermarket debut on Friday, closing the day up 5 points outright and 3 points dollar-neutral.

Booking on the tape

Booking Holdings’ 0.75% convertible notes due 2025 were active early in the session with a large seller in the market, a source said.

The notes were down 2 points outright with stock off 3% in early trading.

They were changing hands at 119.375 versus a stock price of $1,710.40 early in the session.

However, the notes recovered alongside stock as the session progressed and traded back up to 121 although in light volume.

Booking’s stock traded to a low of $1,689.46 and a high of $1,797.16 before closing the day at $1,787.96, an increase of 1.13%.

There was $7 million in reported volume.

However, there were only three large trades in the name with the activity most likely due to a repositioning, a source said.

Synthetics active

Sythetic convertible notes continued to see heavy volume with the notes switching hands as their maturity approaches.

BofA’s 0.125% cash-settled notes tied to Charter due Sept. 1, 2022 remained active with the notes maturing in less than two months.

With no call optionality left, the 0.125% notes continued to trade for their yield.

The notes were trading just shy of 99.5 with the yield about 4.125%, according to a market source.

There was $10 million in reported volume.

While not equity sensitive, Charter’s stock closed Tuesday at $481.22, an increase of 0.062%.

JPMorgan’s 0.25% cash-settled equity-linked notes due 2023 tied to Voya were down in heavy volume.

The notes fell 1 point outright to trade at 103.5 versus a stock price of $58.95.

There was $16 million in reported volume.

Voya’s stock traded to a low of $58.49 and a high of $59.79 before closing the day at $59.36, a decrease of 2.22%.

Mentioned in this article:

Booking Holdings Inc. Nasdaq: BKNG

Charter Communications Inc. Nasdaq: CHTR

Cytokinetics Inc. Nasdaq: CYTK

Voya Financial, Inc. NYSE: VOYA

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