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Morning Commentary: American Electric Power trades up; Euronet continues to dominate
By Abigail W. Adams
Portland, Me., March 15 – The convertibles secondary market opened with $700 million in new paper entering the space, capping off what has been another high-volume week for new deal activity.
American Electric Power Co. Inc. priced $700 million, or 14 million units, of $50-par three-year equity units after the market close on Thursday with a dividend of 6.125% and an initial conversion premium of 20%.
Pricing came at the rich end of talk for a dividend 6.125% to 6.625% and at the midpoint of talk for an initial conversion premium of 17.5% to 22.5%.
The equity units consist of a contract to purchase common stock and a 1/20 interest in a $1,000-par 3.4% junior subordinated debenture due March 15, 2024.
The units were “trading up a storm” early in Friday’s session, a market source said.
They were quoted at $50.25 to $50.375 bid and were changing hands between $50.25 to $50.50, sources said.
American Electric’s stock traded up to $83.88, an increase of 1.08%, shortly before 11 a.m. ET.
Meanwhile, Euronet Worldwide Inc.’s 0.75% convertible notes due 2049 remained the most actively traded convertible bonds in the secondary space with $36 million on the tape about one hour into Friday’s session.
The notes were changing hands around 104.5 with stock down early in the session and were slightly improved from the 3-point expansion seen on their market debut on Thursday, a market source said.
Euronet stock traded down to $138.85, a decrease of 1.15%, shortly before 11 a.m. ET.
The notes were rich from the get go yet continued to trade up in the secondary space.
“Those were a blowout,” a source said.
There was good trading back and forth with swap sellers and outright buyers, a market source said.
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