CenterPoint Energy convertibles price, hold on trading debut; SolarEdge falls outright

By Abigail W. Adams

Portland, Me., Aug. 2 – It was an active day in the convertibles secondary space on Wednesday as the first new paper in more than one month made its aftermarket debut.

CenterPoint Energy Inc. priced $900 million of three-year convertible notes after the market close on Tuesday.

While the market has been saturated with investment-grade utility paper, the deal played to solid demand at the cheap end of talk and put in a solid performance despite a heavy day for the market.

New paper from CenterPoint hit the secondary space as equity markets sank with Fitch Ratings’ downgrade of the U.S.’s long-term credit rating rattling markets.

The Dow Jones industrial average closed Wednesday down 348 points, or 0.98%, the S&P 500 index closed down 1.38%, the Nasdaq Composite index closed down 2.17% and the Russell 2000 index closed down 1.37%.

There were large movements in the space with volatility returning to equities.

SolarEdge Technologies Inc.’s 0% convertible notes due 2025 saw heavy volume with the notes plunging outright alongside stock following earnings.

However, the notes were flat dollar-neutral.

CenterPoint holds up

CenterPoint Energy priced $900 million of three-year convertible notes after the market close on Tuesday at par with a coupon of 4.25% and an initial conversion premium of 25%.

Pricing came toward the cheap end of talk for a coupon of 3.875% to 4.375% and at the cheap end of talk for and initial conversion premium of 25% to 30%.

The deal was not the one market players had been hoping would reopen the primary with the market saturated with investment-grade utility paper.

However, it played to strong demand at the cheap end of talk although some lost interest as pricing tightened 0.125 point from the cheaps, a source said.

Still, there remained a good spread between the common stock and convertible notes yields, the source said.

While the new paper hit the secondary space on a heavy day for the market with equities rolling over from their recent heights, they held up well.

There was some “sloppy selling,” early in the session with the notes wrapped around par.

However, they improved as the session progressed.

The notes were trading in the 100.125 to 100.375 context with stock in the red early in the session.

They closed the day at 100.375 bid, 100.625 offered with stock returning to positive territory.

CenterPoint’s stock traded to a low of $29.27 and a high of $29.80 before closing at $29.74, up 0.85%.

SolarEdge’s earnings

SolarEdge’s 0% convertible notes due 2025 were once again in focus with the notes falling outright alongside stock following earnings.

The 0% notes sank 11 points outright with stock off 18%.

They were wrapped around 101 heading into the close.

However, the notes were moving in line dollar-neutral and were flat on hedge.

SolarEdge’s stock traded to a high of $207 and a low of $191.65 before closing at $195.51, a decrease of 18.36%.

Stock dropped after the smart energy technology company posted mixed earnings and a downbeat forecast.

SolarEdge beat on the bottom line but missed on the top with earnings per share of $2.62 versus the $2.56 expected on revenue of $991.29 million versus the $995.89 million expected.

While second-quarter earnings were mixed, revenue forecasts for the third quarter came in well below expectations.

SolarEdge expects revenue of $880 million to $920 million versus analyst expectations for revenue of $1.05 billion.

Mentioned in this article:

CenterPoint Energy Inc. NYSE: CNP

SolarEdge Technologies Inc. Nasdaq: SEDG

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