Morning Commentary: Duke, Southern Co. convertibles lead quiet morning; Chegg active

By Abigail W. Adams

Portland, Me., April 25 – It was another quiet start to the day in the convertibles secondary space with investment-grade issues in focus as First Republic Bank’s earnings reawakened concerns about the stability of the banking sector.

The Dow Jones industrial average was down 67 points, or 0.20%, the S&P 500 index was down 0.68%, the Nasdaq Composite index was down 0.88% and the Russell 2000 index was down 1.49% shortly before 11 a.m. ET.

There was $80 million in reported convertibles trading volume about one hour into the session with Duke Energy Corp.’s 4.125% convertible notes due 2026 (Baa2/BBB) and Southern Co.’s 3.875% convertible notes due 2025 (Baa2/BBB) accounting for about ¼ of the total volume in the space.

The investment-grade notes inched higher as Treasury yields fell in early trading.

Duke Energy’s 4.125% convertible notes were changing hands at 102 versus a stock price of $99.21 early in the session, according to a market source.

There was $11 million in reported volume.

Duke Energy’s stock was seen at $99.59, an increase of 0.70%, shortly before 11 a.m. ET.

Southern Co.’s 3.875% convertible notes due 2025 were trading just shy of 103.5 versus a stock price of $74.08.

There was $11 million in reported volume.

Southern Co.’s stock was changing hands at $74.27, up 0.24%, shortly before 11 a.m. ET.

Outside of the usual suspects, Chegg Inc.’s 0.125% convertible notes due 2025 were active with the notes lower alongside stock after announcing the date of its earnings release and a leadership change.

The 0.125% notes were trading at 89.375 versus a stock price of $18.35 early in the session.

There was $5 million in reported volume.

Chegg’s stock was seen at $18.41, a decrease of 0.24%, shortly before 11 a.m. ET.

The company announced on Tuesday that the president of Chegg Skills resigned from his post.

The online textbook rental, tutoring, scholarship and internship matching company is expected to release earnings on Monday.

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