New convertibles in focus; NRG Energy dominates trading; Atlassian, Akamai notes active

By Abigail W. Adams

Portland, Me., May 24 – No new convertibles hit the secondary market on Thursday after an influx of $2.3 billion earlier in the week.

However, the convertibles space was active with most names trading largely in line, a market source said.

NRG Energy Inc.’s 2.75% notes due 2048 and FireEye Inc.’s new 0.875% convertible notes due 2024 returned to focus as the volume leaders during Thursday’s session.

NRG Energy’s 2.75% notes rebounded on an outright basis alongside the stock but were largely flat dollar neutral from their issue price, a market source said.

FireEye’s 0.875% convertible notes made slight gains on an outright basis in high-volume trading but still remain below par.

Both notes made their market debut on Tuesday.

The trading frenzy surrounding Square Inc.’s new 0.5% convertible notes due 2023 slowed on Thursday.

While the notes were still one of the top four volume movers during Thursday’s session, the trading activity trailed the activity surrounding NRG Energy and FireEye, a market source said.

Trading of Envestnet Inc.’s new 1.75% notes due 2023 also slowed their second day in the market. While the notes saw gains early in the session, they closed the day largely unchanged on an outright and dollar-neutral basis.

Atlassian Corp.’s 0.625% convertible notes due 2023, which priced in late April, were among the volume movers of Thursday’s session with the notes making gains on an outright basis.

Last week’s billion-dollar deal from Akamai Technologies Inc. continued to see active trading in the convertibles space with the new 0.125% convertible notes due 2025 trading up alongside the stock.

NRG Energy in focus

NRG Energy’s newly priced 2.75% convertible notes due 2048 saw renewed attention on Thursday with the notes and company stock doing an about face.

The notes climbed 2.5 points on an outright basis, trading up to 101.5 after trading below par on Wednesday.

The notes were seen trading at 101.5 versus a stock price of $34.36, according to a market source. More than $29 million of the bonds traded on Thursday.

While the notes were up outright, they were seen flat on a dollar-neutral basis since their pricing, a market source said.

NRG stock closed Thursday at $34.43, an increase of 3.86%.

NRG Energy’s 2.75% notes traded below par on Wednesday, their second full day in the market.

They were seen trading at 99.4 and were coming in about 0.25 point dollar neutral on Wednesday after closing Tuesday with a 0.5 point expansion.

FireEye active

FireEye’s 0.875% convertible notes due 2024 were active on Thursday with the notes climbing about 1 point on an outright basis. Despite the gains, the notes remained below par.

They were seen trading at 99.5 versus a stock price of $16.85 with more than $27 million of the bonds traded during Thursday’s session, according to a market source.

FireEye stock closed Thursday at $16.83, an increase of 0.96%.

FireEye’s 0.875% convertible notes have traded below par since their market debut on Tuesday with stock down since pricing. FireEye stock was $17.16 when the new notes priced.

They have largely traded inline dollar neutral, sources said.

Square tempers

After dominating activity in the secondary space on Wednesday, trading of Square’s new 0.5% convertible notes due 2023 slowed on Thursday.

While still a top-volume mover on Thursday, about $20 million of the bonds were seen on the tape shortly before the closing bell while $100 million of the bonds traded on their Wednesday debut.

The notes continued to make gains on an outright basis, climbing about 0.75 point to trade up to 102.125 versus a stock price of $55.66, a market source said.

Square’s 0.5% convertibles closed Wednesday at 100.875 bid, 101.375 offered versus a stock price of $55.09 and were expanded 0.5 point dollar neutral on their debut.

Square’s 0.375% convertible notes due 2022 were also active on Thursday with the notes up about 1 point outright to trade at 242 versus a stock price of $55.67, a market source said.

Square stock closed Thursday at $55.55, an increase of 0.83%.

Envestnet day two

Trading activity surrounding Envestnet’s new 1.75% notes due 2023 also slowed with about $6 million on the tape early in the session and $7 million late in the afternoon.

The notes were up slightly on an outright basis to trade at 103.375 early in the session, a market source said.

Trading of the notes dropped off as Envestnet’s stock turned from positive to negative mid-session. The notes were seen trading at 102.625 versus an equity price of $54.30 late in the session.

The notes were largely unchanged dollar neutral after a 0.875-point expansion on their Thursday debut.

Envestnet stock closed Thursday at $54.50, a decrease of 0.73%.

Atlassian returns

While the new deals of the past two weeks have largely occupied the attention of the convertibles space, the secondary market is starting to refocus on other outstanding issuances.

Atlassian’s 0.625% convertible notes due 2023, which priced in late April, saw trading activity on Thursday that outpaced Square’s new 0.5% convertible notes.

The 0.625% notes were up about 1 point outright to trade just south of 105 with the stock up to $64.36, a market source said.

The notes were largely moving in line dollar neutral.

Atlassian stock closed Thursday at $63.93, an increase of 1.57%.

Akamai week two

Akamai’s new 0.125% convertible notes continued to see trading action in the secondary space with the notes moving up alongside stock during Thursday’s session.

The notes were seen trading at 102.275 versus an equity price of $77.51, a market source said. More than $16 million of the bonds were on the tape by late in the session.

Akamai stock closed Thursday at $77.47, an increase of 0.58%.

Akamai’s deal was one of several recent deals that saw the greenshoe exercised in full. The greenshoe raised the total size of the deal to $1.15 billion.

Akamai priced the $1 billion deal on May 16.

Mentioned in this article:

Atlassian Corp. Nasdaq: TEAM

Akamai Inc. Nasdaq: AKAM

Envestnet Inc. NYSE: ENV

FireEye Inc. Nasdaq: FEYE

NRG Energy Inc. NYSE: NRG

Square Inc. NYSE: SQ

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