Advanced Energy convertible notes active; Vishay Intertechnology, Seagate notes improve

By Abigail W. Adams

Portland, Me., Sept. 15 – The convertibles primary market closed the books on a lackluster week for new issuance with only one $300 million offering clearing the market, far below market expectations after $5 billion cleared the market the previous week.

While new deal activity was muted over the past week, the calendar remains full with pricing expected to become more attractive.

Meanwhile, it was a quiet day in the secondary space with equity markets in the red after a seesaw week.

The latest Consumer Price Index report did little to provide an uncertain market with direction with all eyes now on the Fed’s upcoming announcement on Sept. 20.

While markets widely anticipate a pause in rate hikes, the announcement will be scoured for clues about the Fed’s plans in November and December.

The Dow Jones industrial average closed Friday down 289 points, or 0.83%, the S&P 500 index closed down 1.22%, the Nasdaq Composite index closed down 1.56% and the Russell 2000 index closed down 1.05%.

While trading volumes were muted, several recent convertible bond issues remained active with the notes continuing to put in mixed performances.

Advanced Energy Industries Inc.’s 2.5% convertible notes due 2028 were active with the notes lower outright but continuing to improve dollar-neutral on a weak day for stocks.

Vishay Intertechnology Inc.’s 2.25% convertible notes due 2030 (BB+) improved on Friday although the notes remained well below par and contracted dollar-neutral.

Seagate HDD Cayman’s 3.5% exchangeable notes due 2028 continued to improve.

The performance of recent issues has largely been a product of pricing, sources said.

While deals have started to cheapen, pricing has remained tight for refinancings with investors who have not participated in the exchanges of outstanding notes missing out on the value of the offerings.

Advanced Energy active

Advanced Energy’s 2.5% convertible notes due 2028 were active during an otherwise quiet session with the notes lower outright but continuing to improve dollar-neutral.

The 2.5% notes were off about 1 point outright as stock fell about 2.5%.

The notes were wrapped around 101.875 throughout the session, sources said.

There was $8 million in reported volume.

Advanced Energy’s stock traded to a low of $103.06 and a high of $105.89 before closing at $104.58, a decrease of 1.96%.

Advanced Energy’s 2.5% notes have outperformed in the aftermarket with the notes expanding 2 to 2.5 points since pricing.

Vishay improves

Vishay’s 2.25% convertible notes due 2030 improved on Friday although the notes remained below par and contracted dollar-neutral since pricing.

The 2.25% notes remained wrapped around 99 on a weak day for stock.

They improved about 0.25 point dollar-neutral, a source said.

There was $5 million in reported volume.

Vishay’s stock traded to a low of $24.84 and a high of $25.10 before closing at $25, off 0.44%.

The 2.25% notes have struggled since pricing with the notes falling below par and contracting dollar-neutral.

Sources attributed the notes’ lackluster performance to their tight pricing.

Vishay priced a $750 million issue of the 2.25% notes at par on Sept. 7 with proceeds used to fund the repurchase of the company’s 2.25% convertible notes due 2025.

The deal did not model as attractively as the other issues to price in the torrent of new deal activity last week with the real kiss coming in the buyback of its 2025 notes, sources said.

Seagate improves

Seagate’s 3.5% exchangeable notes due 2028 continued to improve on Friday after a solid aftermarket performance.

The 3.5% notes gained about 0.5 point outright to break above a 101-handle.

They traded up to 102.125 with stock off during Friday’s session.

Seagate’s stock traded to a low of $63.63 and a high of $64.75 before closing at $63.75, down 0.78%.

The notes have put in a strong performance since pricing with the notes expanded about 1.5 points dollar-neutral, sources said.

Mentioned in this article:

Advanced Energy Industries Inc. Nasdaq: AEIS

Seagate Technology Holdings plc Nasdaq: STX

Vishay Intertechnology Inc. NYSE: VSH

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