Rivian convertible notes hit new heights; American Water, Ventas Realty trade higher

By Abigail W. Adams

Portland, Me., July 3 – It was an anemic day in the convertibles secondary space on Monday with few making moves ahead of the market’s early closure for the July 4 holiday on Tuesday.

Equity markets were either side of unchanged on Monday with indexes mixed early in the session but lifted into positive territory by the 1 p.m. ET closure of the market.

The Dow Jones industrial average closed Monday up 11 points, or 0.03%, the S&P 500 index closed up 0.12%, the Nasdaq Composite index closed up 0.21% and the Russell 2000 index closed up 0.43%.

There was $100 million in reported volume about one hour before the market’s close with investment-grade convertible notes the driving force of trading activity.

American Water Capital Corp.’s 3.625% exchangeable notes due 2026 (Baa1/A-) and Ventas Realty, LP’s 3.75% exchangeable notes due 2026 (Baa1/BBB+) accounted for nearly half of the reported volume in the space with the notes improving alongside stock.

Duke Energy Corp.’s 4.125% convertible notes due 2026 (Baa2/BBB) also improved although the notes remained near their all-time low.

While broader markets were largely flat, Rivian Automotive Inc.’s 4.625% convertible notes due 2029 shot up to their highest outright level since pricing as stock surged on the heels of better-than-expected vehicle delivery numbers.

IG improves

It was another day of investment-grade names dominating the convertibles secondary space with several names improved after taking a hit during the rout in Treasuries the previous week.

American Water’s 3.625% exchangeable notes due 2026 gained about 0.5 point outright.

The 3.625% notes were changing hands at 101 versus an equity price of $143.60 heading into the early close, according to a market source.

There was $24 million in reported volume.

American Water’s stock traded to a low of $141.64 and a high of $144.06 before closing at $143.97, an increase of 0.85%.

The 3.625% exchangeable notes were the sole deal to clear the primary market the previous week and the last deal of the quarter.

The notes have performed as expected in secondary market activity and have made nominal dollar-neutral gains.

Ventas’ 3.75% exchangeable notes due 2026 were lifted to their highest level since pricing at par in early June.

The 3.75% notes gained 0.75 point outright with stock up about 2%.

The notes were changing hands just shy of 103 versus a stock price of $48.26 heading into the close.

There was $20 million in reported volume.

Ventas’ stock traded to a low of $47.04 and a high of $48.44 before closing at $48.26, an increase of 2.11%.

Duke Energy’s 4.125% convertible notes due 2026 also improved although they remained near their historic lows.

The 4.125% notes gained about 0.25 point outright with stock up about 1%.

The notes were seen at 97.875 in early trading, according to a market source.

Duke Energy’s stock traded to a low of $89.48 and a high of $90.79 before closing at $90.72, an increase of 1.07%.

The notes fell to a 97-handle the previous week, their lowest level since pricing at par in early April.

Investment-grade convertible notes saw some selling pressure the previous week as Treasury yields soared in response to strong macro data.

Rivian’s new heights

Rivian’s 4.625% convertible notes due 2029 shot up to their highest outright level since pricing as stock soared on the heels of better-than-expected vehicle deliveries.

The 4.625% notes gained 9 points outright with stock up more than 16%.

The notes were trading at 119.25 versus a stock price of $18.76 heading into the close.

There was $12 million in reported volume.

Rivian’s stock traded to a low of $17.80 and a high of $19.70 before closing at $19.56, an increase of 17.41%.

The convertible notes and stock skyrocketed after Rivian bested expectations with its vehicle deliveries.

Rivian announced that it had delivered 12,640 vehicles in the second-quarter versus the 11,000 expected.

Rivian’s convertible notes have gained more than 25 points outright in the past few trading sessions with stock up more than 40%.

The notes opened the previous week on a 96-handle.

Mentioned in this article:

American Water Works Co. Inc. NYSE: AWK

Duke Energy Corp. NYSE: DUK

Rivian Automotive Inc. Nasdaq: RIVN

Ventas Inc. NYSE: VTR

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