Akamai, Fluor convertible notes gain steam; CenterPoint, CMS Energy paper active

By Abigail W. Adams

Portland, Me., Aug. 31 – While it was an active start to the day in the convertibles secondary space on Thursday, activity tempered as the session progressed as the rally in equities subsided following the latest piece of macro data.

Equity indexes launched the day strong on the heels of the latest Personal Consumption Expenditures report, which came in line with expectations.

However, indexes gave back much of their early gains and closed the day mixed with the Dow Jones industrial average down 168 points, or 0.48%, the S&P 500 index down 0.16%, the Nasdaq Composite index up 0.11% and the Russell 2000 index down 0.19%.

While the market initially cheered on the PCE report, it still reflected an increase in inflation, a source said.

There was $70 million on the tape about one hour after the opening bell, a notable uptick from previous sessions, with end-of-month clean up a driving force of the trading volume.

However, activity petered out as the session progressed with $267 million in reported volume in the late afternoon.

Several recent issues that have struggled in the secondary market saw notable improvement during Thursday’s session.

Akamai Technologies Inc.’s 1.125% convertible notes due 2029 continued to gain after a lackluster start in the secondary space.

Fluor Corp.’s 1.125% convertible notes due 2029 were also on the rise on an outright and dollar-neutral basis with the notes once again trading above par.

Outside of recent issues, activity remained concentrated in investment-grade issues with CenterPoint Energy Inc.’s 4.25% convertible notes due 2026 (Baa2) and CMS Energy Corp.’s 3.375% convertible notes due 2028 (Baa2) the high-grade flavors of the day.

Akamai inches higher

Akamai’s 1.125% convertible notes due 2029 continued to notch outright gains in active trade on Thursday although the notes were largely moving in line dollar-neutral.

The 1.125% notes were up about 0.25 point outright with stock up 0.5%.

The convertibles were changing hands at 101 versus a stock price of $105.20, according to a market source.

They remained wrapped around 101 in the late afternoon.

There was $16 million in reported volume.

Akamai’s stock traded to a low of $104.87 and a high of $105.62 before closing at $105.09, an increase of 0.43%.

The 1.125% convertible notes have underperformed since hitting the secondary space on Aug. 16.

The notes broke above par for the first time since their aftermarket debut earlier in the week.

However, while they have gained outright, the notes remain flat to slightly contracted on a dollar-neutral, or hedged, basis, a source said.

Fluor gains

Fluor’s 1.125% convertible notes due 2029, another one of August’s underperforming issues, made strong outright and dollar-neutral gains on Thursday with the notes now firmly above par.

The 1.125% notes were up 1.5 points outright with stock up less than 1%.

The convertibles were seen at 101.125 versus a stock price of $35.02 in the late afternoon, according to a market source.

There was $8 million in reported volume.

Fluor’s stock traded to a low of $34.78 and a high of $35.74 before closing at $34.99, up 0.6%.

While Fluor’s convertible notes initially saw a strong start in the secondary market after pricing on Aug. 7, they quickly gave back their initial gains and traded as low as a 97-handle in mid-August.

The notes have made steady gains amid the market rally over the past week.

IG trades

High-grade issues were active on Thursday as activity dwindled heading into the Labor Day holiday.

CenterPoint Energy’s 4.25% convertible notes due 2026 saw heavy volume although with little movement in price.

The 4.25% notes were wrapped around 99 versus a stock price of $27.95 in the late afternoon.

There was $19 million in reported volume.

CenterPoint’s stock traded to a low of $27.85 and a high of $28.12 before closing the day at $27.89, a decrease of 0.11%.

CMS Energy’s 3.375% convertible notes due 2028 also saw heavy volume although with little price movement.

The notes were changing hands at 96.25 versus a stock price of $56.62 in the late afternoon.

There was $11 million in reported volume.

CMS Energy’s stock traded to a low of $56 and a high of $57.11 before closing at $56.19, down 0.95%.

Mentioned in this article:

Akamai Technologies Inc. Nasdaq: AKAM

CenterPoint Energy Inc. NYSE: CNP

CMS Energy Corp. NYSE: CMS

Fluor Corp. NYSE: FLR

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