Morning Commentary: Algonquin Power equity units on tap, look cheap; secondary quiet

By Abigail W. Adams

Portland, Me., June 17 – The convertibles primary market continued to churn out new deals with one large offering set to price after the market close.

Algonquin Power & Utilities Corp. plans to price $900 million of three-year par-of-$50 equity units after the market close on Thursday with price talk for a coupon of 7.375% to 7.875% and an initial conversion premium of 17.5% to 22.5%, according to a market source.

The deal was heard to be in the market with assumptions of 60 basis points over Libor and a 20% to 22% vol. skew.

Using those assumptions, the deal looked 2.26 points cheap at the midpoint of talk, a source said.

Meanwhile, the secondary space was quiet despite a strong morning for growth stocks with the tech-heavy Nasdaq composite up 0.68% shortly before 11 a.m. ET while the S&P 500 index was flat and the Dow Jones industrial average sank by 145 points, or 0.43%.

There was $130 million in reported volume a little over one hour into the session. However, few names saw concentrated trading activity.

Cracker Barrel Old Country Store Inc.’s 0.625% convertible notes due 2026 remained active with the notes trading down on an outright basis alongside stock.

The 0.625% notes were down a little over 1 point with stock down a little under 1%.

The notes were changing hands at 100.5 versus a stock price of $150.35, according to a market source.

There was $8 million of the bonds on the tape.

Cracker Barrel stock was changing hands at $150.22, a decrease of 1.07%, shortly before 11 a.m. ET.

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