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Morning Commentary: CenterPoint Energy convertibles trade at issue; Splunk notes active
By Abigail W. Adams
Portland, Me., Sept. 27 – The convertibles secondary market was quiet on Thursday with the recent deals to enter the space occupying the majority of trading activity.
CenterPoint Energy Inc.’s 7% three-year series B mandatory convertible preferred stock sold as $50-par depositary shares saw light trading volume compared to their market debut on Wednesday.
However, the shares remained active and were trading at their $50 issue price early in Thursday’s session.
They were seen at $49.875 bid, $50.125 offered versus a stock price of $27.25, according to a market source.
The depositary shares were volatile on their market debut trading, at times, north of $51.00 and closing the day below issue price at $49.90.
However, the average trading price for the depositary shares during Wednesday’s session was around $50.25, a market source said.
While mandatory convertible preferred stock typically prices 1 to 2 points cheap, CenterPoint’s deal came at fair value, the source said.
The lack of cheapness of the deal was pointed to as the reason the shares were hovering around their issue price in secondary trading.
Splunk Inc.’s 0.5% convertible notes due 2023 and 1.125% convertible notes due 2025 returned to focus in the secondary space early Thursday with stock up about $1.
The 1.125% convertible notes due 2025 traded up to 101.75 with about $12 million of the bonds on the tape early in the session.
The 0.5% convertible notes were trading between 101.5 and 102 with about $7 million on the tape.
The notes were moving in line on a dollar-neutral basis, a market source said.
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