Convertibles secondary ‘deathly quiet’; high-grade names in focus; Shockwave active

By Abigail W. Adams

Portland, Me., April 8 – The convertibles primary market remained dormant on Monday with many questioning what the pipeline will look like in the second quarter.

While the initial weeks of April are expected to be quiet due to earnings season blackouts, there is also concern that the relatively attractive pricing in the high-yield market may be capturing some market share.

Meanwhile, the secondary space was “deathly quiet” early Monday with little news to jumpstart activity on a flat open for markets, a source said.

However, activity picked up as the session progressed with high-grade names again driving volume.

Equity indexes were either side of unchanged as Treasury yields crept higher with market players beginning to reassess the likelihood of a June rate cut.

The Dow Jones industrial average closed Monday down 11 points, or 0.03%, the S&P 500 index closed down 0.04%, the Nasdaq Composite index closed up 0.03% and the Russell 2000 index closed up 0.50%.

There was $27 million in reported volume about one hour into the session and $412 million on the tape in the late afternoon.

While high-grade names were active, there was little movement in price after some weakness the previous week.

Evergy Inc.’s 4.5% convertible notes due 2027 (Baa2/BBB), Ventas Realty, LP’s 3.75% exchangeable notes due 2026 (Baa1/BBB+) and CenterPoint Energy Inc.’s 4.25% convertible notes due 2026 (Baa2) were the top traded high-grade names of Monday’s session.

In a carry-over from the previous session, Shockwave Medical Inc.’s 1% convertible notes due 2028 remained active with Johnson & Johnson’s $13.1 billion takeover of the company continuing to spark movement in the name.

Ford Motor Co.’s 0% convertible notes due 2026 (Ba1/BBB-) were among the most actively traded issues early in the session although activity in the name dwindled as the session progressed.

High-grade trades

It was another day of high-grade trades in the secondary space on Monday with the highly liquid issues driving volume on an otherwise uneventful day in the secondary space.

Evergy’s 4.5% convertible notes due 2027 were trading at 101.125 versus a stock price of $52.78 in the late afternoon, according to a market source.

There was $13 million in reported volume.

Evergy’s stock traded to a low of $52.11 and a high of $52.91 before closing at $52.78, an increase of 1.11%.

Ventas Realty’s 3.75% exchangeable notes due 2026 were trading at 99.75 versus a stock price of $43.53.

There was also $13 million in reported volume.

Ventas’ stock traded to a low of $42.85 and a high of $43.58 before closing at $43.49, up 0.88%.

CenterPoint Energy’s 4.25% convertible notes due 2026 were trading at 98.75 versus a stock price of $28.20 in the late afternoon, a source said.

There was $11 million in reported volume.

CenterPoint’s stock traded to a low of $27.98 and a high of $28.31 before closing at $28.22, up 0.61%.

Shockwave active

Shockwave Medical’s 1% convertible notes due 2028 remained active on Monday with news of Johnson & Johnson’s $13.1 billion takeover continuing to spark activity in the issue.

The 1% notes were little changed in the heavy volume.

They were trading at 126.125 versus a stock price of $326.22 in the late afternoon, according to a market source.

There was $11 million in reported volume.

Shockwave Medical’s stock traded to a high of $326.94 and a low of $325.60 before closing at $325, a decrease of 0.23%.

While Shockwave Medical’s convertible notes were active on Friday after Johnson & Johnson announced its $13.1 billion acquisition of the company, they were weaker on the heels of the announcement.

The real move in the convertible notes came the week prior to the announcement when news broke that Johnson & Johnson was in active talks with the company.

The convertible notes will be taken out in the acquisition, a source said.

Ford improves

Ford’s 0% convertible notes due 2026 saw some action early in the session although activity in the name later dwindled.

The notes were moving higher on a strong day for stock.

The convertibles added about 0.5 point outright with stock up 1.5% in intraday activity.

The notes were trading at 104.5 versus a stock price of $13.49 early in the session, a source said.

There was $5 million in reported volume.

Ford’s stock traded to a high of $13.54 and a low of $13.09 before closing at $13.41, an increase of 0.98%.

Mentioned in this article:

CenterPoint Energy Inc. NYSE: CNP

Evergy Inc. Nasdaq: EVRG

Ford Motor Co. NYSE: F

Ventas Realty, LP NYSE: VTR

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