NextEra equity units contract on debut; Sarepta convertibles add outright; Alnylam gains

By Abigail W. Adams

Portland, Me., Sept. 15 – The convertibles primary market capped its highest volume week of 2022 with the largest offering of the year, which was also the first mandatory convertible deal of the year.

NextEra Energy Inc. priced $2 billion of three-year $50-par equity units after the market close on Wednesday.

The new paper came on another volatile day for equities with indexes again wavering between gains and losses throughout the session before closing the day in the red.

The Dow Jones industrial average closed down 173 points, or 0.56%, the S&P 500 index closed down 1.13%, the Nasdaq Composite index closed down 1.43% and the Russell 2000 index closed down 0.72%.

NextEra’s 6.926% equity units struggled under the volatile market conditions.

While they pared their outright losses to end the day close to their discounted reoffer price, they remained contracted dollar-neutral.

The new equity units dominated activity in the secondary space with volume outside of the new paper light.

There was $64 million in reported convertible bond trading volume about one hour into the session and $323 million on the tape about one hour before the market close.

Sarepta Therapeutics Inc.’s new 1.25% convertible notes due 2027 and Alnylam Pharmaceuticals Inc.’s new 1% convertible notes due 2027 remained active.

While Sarepta’s new notes continued to gain outright, they were flat dollar-neutral.

Alnylam’s 1% convertible notes also improved outright in active trading.

NextEra contracts

NextEra priced $2 billion of three-year $50-par equity units after the market close on Wednesday with a fixed coupon of 6.926%, a fixed threshold appreciation premium of 25% and a reoffer price of $48.75.

Pricing came in line with talk for a fixed coupon of 6.926%, a fixed conversion premium of 25% and at the cheap end of talk for a reoffer price of $48.75 to $49.25, or 97.5% to 98.5% of par.

The new paper struggled out of the gate on another volatile day for equity markets.

The notes traded as low as $47.85 pre-open but pared their losses as the session progressed.

The notes were changing hands in the $48.5 to $48.75 range in the late afternoon.

However, they contracted 0.25 to 0.5 point dollar-neutral.

NextEra’s stock traded to a low of $84.82 and a high of $86.80 before closing the day at $86.01, a decrease of 3.25%.

With the offering the first mandatory deal of the year, demand was expected to be greater than it was.

“You’d think people would have been tripping over each other to buy it,” a source said.

However, the offering was an overnight and came amid deep uncertainty in the market.

Sarepta adds outright

Sarepta’s 1.25% convertible notes due 2027 continued to add on an outright basis in heavy volume on Thursday.

However, the notes remained flat dollar-neutral.

The 1.25% notes rose another 1.5 points outright with stock up more than 2.5%.

They were trading at 104.5 versus a stock price of $110.96 in the late afternoon.

There was $22 million in reported volume.

Sarepta’s stock traded to a low of $106.66 and a high of $112.11 before closing the day at $110.68, an increase of 2.89%.

The notes gained 3 points outright and 1.5 points dollar-neutral on their secondary market debut on Wednesday.

Alnylam improves

Alnylam’s 1% convertible notes due 2027 improved in active trading on Thursday.

The notes rose about 0.875 point outright as stock wavered between gains and losses.

The 1% notes were changing hands just shy of 101 versus a stock price of $209.48 in the late afternoon.

There was $13 million in reported volume.

Alnylam’s stock traded to a low of $202.60 and a high of $210.86 before closing the day at $208.48, an increase of 0.096%.

Mentioned in this article:

Alnylam Pharmaceuticals Inc. Nasdaq: ALNY

NextEra Energy Inc. NYSE: NEE

Sarepta Therapeutics Inc. Nasdaq: SRPT

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