NextEra, Duke convertibles dominate the tape; Western Digital, Super Micro improve

By Abigail W. Adams

Portland, Me., April 17 – The convertibles primary market remained dormant on Wednesday with sources expecting a third consecutive week with no new deal activity.

However, there was an uptick of activity in the secondary space as broader markets leveled off after the heaviness of the past few sessions.

Equity indexes were either side of unchanged as Treasury yields came in for the majority of the session.

However, selling set in late in the session with equity indexes sinking into the red.

The Dow Jones industrial average closed Wednesday down 46 points, or 0.12%, the S&P 500 index closed down 0.58%, the Nasdaq Composite index closed down 1.15% and the Russell 2000 index closed down 0.99%.

High-grade names were once again the driving force of volume with NextEra Energy, Inc.’s 3% convertible notes due 2027 (Baa1/BBB+) the top traded issue of the session.

While NextEra’s notes improved in the heavy volume, Duke Energy Corp.’s 4.125% convertible notes due 2026 (Baa2/BBB) were also active although with little movement in price.

Outside of high-grade names, semiconductor companies remained in demand despite the downturn in the market.

Western Digital Corp.’s 3% convertible notes due 2028 were also among the top traded names in the space although the notes were moving largely in line with stock.

Super Micro Computer Inc.’s 0% convertible notes due 2029 were also on the rise despite a red day for stock.

High-grade trades

It was once again a high-grade day in the convertibles secondary space on Wednesday with investment-grade energy and utility companies driving volume in the space.

NextEra’s 3% convertible notes due 2027 were once again the top traded issue although with the notes improving in the heavy volume.

The 3% notes were trading at 105 versus a stock price of $62 early in the session, a source said.

They climbed alongside stock as the session progressed and were trading at 106.5 in the late afternoon.

There was $40 million in reported volume.

NextEra’s stock traded to a low of $61.92 and a high of $63.92 before closing at $63.79, up 3.39%.

Duke Energy’s 4.125% convertible notes due 2026 (Baa2/BBB) were also active although with little movement in price.

The 4.125% notes were trading at 98 versus a stock price of $93.85 early in the session.

They remained wrapped around 98 in the late afternoon.

There was $15 million in reported volume.

Duke Energy’s stock traded to a low of $93.20 and a high of $94.76 before closing at $94.50, up 1.76%.

Western Digital better

Western Digital’s 3% convertible notes due 2028 saw heavy volume on Wednesday with the notes improved early in the session although they were unchanged by the market close, sources said.

The notes were up 2 points outright with stock up a little over 1% early in the session.

The notes were trading at 153.375 versus a stock price of $72.59, according to a market source.

However, the notes gave back their early gains as stock turned negative as the session progressed.

They were trading at 149.875 versus a stock price of $71 in the late afternoon.

There was $16 million in reported volume.

Western Digital’s stock traded to a low of $69.91 and a high of $73.20 before closing at $70.17, a decrease of 1.25%.

Super Micro improves

Super Micro’s 0% convertible notes due 2029 were on the rise in active trade despite a down day for stock.

The notes were trading at 108.5 early in the session and changing hands at 107.875 in the late afternoon, according to a market source.

There was $7 million in reported volume.

Super Micro’s stock traded to a high of $1,020 and a low of $949.41 before closing at $960.08, up 1.66%.

Mentioned in this article:

Duke Energy Corp. NYSE: DUK

NextEra Energy, Inc. NYSE: NEE

Super Micro Computer Inc. Nasdaq: SMCI

Western Digital Corp. Nasdaq: WDC

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