Morning Commentary: Spirit AeroSystems exchangeable notes gain; Rivian notes rally

By Cristal Cody

Tupelo, Miss., Nov. 13 – Market action started off slow with only around $57 billion of reported secondary volume in the convertibles space an hour into the session on Monday.

Spirit AeroSystems, Inc.’s new 3.25% exchangeable senior notes due 2028 that priced last week led activity over the morning with the bonds up nearly 1 point on more than $5 million of trading.

Markets opened mostly softer on Monday following the weekend Veterans Day holiday.

The Dow Jones industrial average was the only equity index higher. The Dow was up 25 points, or 0.07%, while the S&P 500 index fell 0.06%, the Nasdaq Composite index dropped 0.12% and the Russell 2000 index declined 0.35% by around 11:30 a.m. ET.

Volatility was ramping higher.

The CBOE Volatility index rose 3.95% to 14.72.

The biggest gainer seen over the morning was Rivian Automotive Inc.’s recently priced 3.625% convertible notes due 2030, which rallied over 2.25 points.

Spirit up

Spirit AeroSystems’ 3.25% convertible notes due 2028 climbed 0.89 point to trade at 107.95 versus an equity price of $24.47 about an hour after the market opened on Monday, a source said.

Trading totaled $5.4 million.

Spirit AeroSystems sold $200 million of the notes on Wednesday at par with a 32.5% exchange premium in its first tap of the convertibles market.

The company also brought a follow-on stock offering and was in the junk primary market on Thursday with $1.2 billion of 9¾% seven-year senior secured second-lien notes (B3/B-) as part of a series of capital raises.

Spirit AeroSystems’ common stock was up 57 cents, or 2.39%, at $24.83 in early trading on Monday.

Rivian jumps

Rivian’s 3.625% convertible notes due 2030 climbed over 2.25 points about an hour into the session on Monday, a source said.

The notes were trading at 92.55 versus a stock price of $15.71 over the morning.

Secondary supply totaled $3.5 million.

The bonds took back some of last week’s post-earnings losses when the paper traded with a 90 handle.

Rivian’s common stock climbed 5.78% to $16.29 in early trading.

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