Duke Energy convertible notes add in heavy volume; Southern Co., Alliant improve

By Abigail W. Adams

Portland, Me., April 5 – The convertible note primary market remained dormant on Wednesday with the prospects for new issuance during the holiday-shortened week coming to a close.

However, the primary market still logged the fourth biggest week for new deal activity in 2023 with Duke Energy Corp.’s $1.5 billion offering of 4.125% convertible notes due 2026 (Baa2/BBB).

The 4.125% convertible notes were still dominating activity in the secondary space on Wednesday with the notes continuing to add on a mixed day for equities and continued strength in Treasuries, although the rally waned as the session progressed.

The Dow Jones industrial average closed Wednesday up 80 points, or 0.24%, the S&P 500 index closed down 0.25%, the Nasdaq Composite index closed down 1.07% and the Russell 2000 index closed down 0.99%.

There was $161 million in reported volume about one hour into the session and $761 million on the tape about one hour before the market close with Duke’s 4.125% convertible notes accounting for almost one-third of the total volume in the space.

Activity was concentrated in short-duration investment-grade issues, which were again sought after as credit spreads widened.

Southern Co.’s 3.875% convertible notes due 2025 (Baa2/BBB) and Alliant Energy Corp.’s 3.875% convertible notes due 2026 (BBB+) were again gaining strength after dipping on the heels of Duke Energy’s offering.

Booking Holdings Inc.’s 0.75% convertible notes due 2025 (A3/A-) were also a volume mover in Wednesday’s session.

Duke: day two

Duke Energy’s 4.125% convertible notes due 2026 continued to add in heavy volume with the notes improving as credit spreads widened.

The 4.125% notes gained more than 1 point outright their second day in the secondary space.

They were changing hands at 101.125 versus a stock price of $97.38 early in the session.

They rose to 101.75 with stock at $98.89 in the late afternoon.

There was $283 million in reported volume.

Duke Energy stock traded to a low of $96.77 and a high of $99.29 before closing the day at $98.84, an increase of 2.71%.

The notes were looking increasingly attractive as Treasury yields continued to fall with the three-year yield closing Wednesday at 3.571%.

“If you’re going to clip coupons, it might as well be Duke’s,” a source said.

Investment grade gains

Short-duration investment-grade notes were in demand on Wednesday as the rally in credit markets waned with spreads again widening.

Southern Co.’s 3.875% convertible notes due 2025 gained more than 1 point in heavy volume.

They were changing hands at 102.125 versus a stock price of $71.29 in the late afternoon.

There was $37 million in reported volume.

Southern Co. stock traded to a low of $69.77 and a high of $71.67 before closing the day at $71.50, an increase of 2.67%.

Alliant Energy’s 3.875% convertible notes due 2026 were up 1.25 points outright.

The 3.875% notes were trading at 103.875 versus a stock price $54.73 in the late afternoon, according to a market source.

There was $23.5 million in reported volume.

Alliant stock traded to a low of $53.15 and a high of $54.90 before closing the day at $54.82, an increase of 3.55%.

Booking’s 0.75% convertible notes due 2025 were also among the top volume movers of Wednesday’s session.

The notes were changing hands at 148.25 in the late afternoon.

There was $20 million in reported volume.

Booking’s stock traded to a low of $2,590 and a high of $2,635 before closing the day at $2,615.60, a decrease of 0.86%.

Mentioned in this article:

Alliant Energy Corp. Nasdaq: LNT

Booking Holdings Inc. Nasdaq: BKNG

Duke Energy Corp. NYSE: DUK

Southern Co. NYSE: SO

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.