Morning Commentary: Duke Energy hits the secondary space, flat on debut

By Abigail W. Adams

Portland, Me., April 4 – It was an active day in the convertible secondary space as $1.5 billion in new supply made its way to the aftermarket.

Duke Energy Corp. priced $1.5 billion of three-year convertible notes (Baa2/BBB) after the market close on Monday at par with a coupon of 4.125% and an initial conversion premium of 25%.

Pricing came at the midpoint of talk for a coupon of 3.875% to 4.375% and the cheap end of talk for an initial conversion premium of 25% to 30%, according to a market source.

The new paper hit the secondary space on a down day for equities with equity indexes mixed at the open but falling into negative territory as the session progressed.

The Dow Jones industrial average was down 131 points, or 0.40%, the S&P 500 index was down 0.27%, the Nasdaq Composite index was down 0.22% and the Russell 2000 index was down 1.13% shortly before 11 a.m. ET.

Duke’s new 4.125% convertible notes due 2026 were off to a healthy start with the notes marked at 100.25 bid, 100.625 offered in the gray market.

They came in after the opening bell with the bulk of the notes trading in the 100.125 to 100.25 context, a source said.

The notes dominated activity in the secondary space with $128 million in reported volume.

The majority of trades were outright with a few put up on swap, a source said.

Duke Energy stock was changing hands at $95.36, an increase of 0.28%, shortly before 11 a.m. ET.

© 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.