Wayfair ‘taken to the woods’; NextEra weakens; Alnylam improves; Array under pressure

By Abigail W. Adams

Portland, Me., Sept. 16 – New paper continued to drive convertibles trading activity in the secondary space on Friday as selling in equities continued to drag down the market.

While equity indexes pared their losses into the close, they ended the week with heavy losses.

The Dow Jones industrial average closed Friday down 139.4 points, or 0.45%, and dropped 4.1% on the week; the S&P 500 index closed down 0.72% on Friday and dropped 4.8% on the week; the Nasdaq Composite closed down 0.9% and 5.5% on the week and the Russell 2000 index closed down 1.48% and 4.85% on the week.

“Reality is setting in,” a source said. “They’re going to keep raising rates.”

Market expectations for a slowdown in rates were dashed by Tuesday’s hotter-than-expected inflation report with equity markets plummeting and credit spreads blowing out as the market upwardly revised its Federal Funds rate targets.

The forecasts for restrictive financial conditions sparking a recession increased following FedEx Corp.’s stark warning as it slashed its guidance ahead of next week’s earnings.

Wayfair Inc.’s new 3.25% convertible notes due 2027 were “taken to the woods” on Friday with the notes plunging outright and contracting dollar-neutral after an initial strong performance in the secondary market.

NextEra Energy Inc.’s 6.926% equity units were also weaker in active trading.

Alnylam Pharmaceuticals Inc.’s new 1% convertible notes due 2027 bucked the broader market trend and added outright with stock on the rise.

Outside of new paper, Array Technologies Inc.’s 1% convertible notes due 2028 saw heavy volume with the notes lower on an outright and dollar-neutral basis.

Wayfair crumbles

Wayfair’s recently priced 3.25% convertible notes due 2027 were “taken to the woods” on Friday, a source said, with the notes plunging below par and contracting dollar-neutral after having traded as high as 111 on Monday.

The notes were down 6 points outright with stock off more than 4%.

They were changing hands at 97.5 versus a stock price of $46.91 early in the session.

They traded at 97 versus a stock price of $45.40 in the late afternoon.

The notes contracted 1 point to 1.5 points on swap, a source said.

There was $12 million in reported volume.

Wayfair’s stock traded to a low of $44.97 and a high of $47.72 before closing the day at $45.20, a decrease of 6.5%.

Wayfair’s 3.25% convertible notes skyrocketed on their secondary market debut on Sept. 9 with the notes continuing to see strong momentum through Monday’s session.

The notes traded as high as 111 and expanded as much as 3.5 points on swap.

However, the notes began to crack amid the selling pressure sparked by Tuesday’s CPI report with Friday’s session marking the first time the notes fell below par or saw a large contraction.

NextEra lower

NextEra Energy’s new 6.926% equity units were also weaker in active trading on Friday.

The units were down about 0.5 point to change hands in the $48 to $48.5 context throughout the session.

NextEra’s stock traded to a high of $85.99 and a low of $84.50 before closing the day at $84.79, a decrease of 1.46%.

The units have been under water since their secondary market debut on Thursday.

NextEra priced $2 billion of the 6.926% equity units at $48.75 post-close on Wednesday.

Alnylam gains

Alnylam’s new 1% convertible notes due 2027 bucked the broader market trend and added during Friday’s session.

The 1% notes rose 0.5 point outright with stock up 2%.

The notes were trading at 101.125 versus a stock price of $210.74 in the late afternoon, according to a market source.

There was $10 million in reported volume.

Alnylam’s stock traded to a low of $205.85 and a high of $213.06 before closing the day at $213, an increase of 2.17%.

While the $900 million paper, which priced at par, made its aftermarket debut on Tuesday, it has held at par and expanded dollar-neutral despite the pressure on broader markets.

Array under pressure

Array Technologies’ 1% convertible notes due 2028 were under pressure in active trading on Friday.

The notes fell 2 points outright with stock off 1%.

They were changing hands at 94 versus a stock price of $17.75 in the late afternoon, according to a market source.

The notes contracted about 0.75 point dollar-neutral, a source said.

There was $10 million in reported volume.

Array’s stock traded to a low of $17.26 and a high of $18.13 before closing the day at $17.82, a decrease of 1.05%

Mentioned in this article:

Alnylam Pharmaceuticals Inc. Nasdaq: ALNY

Array Technologies Inc. Nasdaq: ARRY

NextEra Energy Inc. NYSE: NEE

Wayfair Inc. NYSE: W

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