Duke, Southern Co. convertibles lead quiet session; Rivian under pressure; onsemi down

By Abigail W. Adams

Portland, Me., April 25 – The convertibles primary market remained dormant and the convertibles secondary space quiet on Tuesday as First Republic Bank’s earnings reawakened concerns about the stability of the banking sector.

Equity indexes launched the day in the red with selling pressure intensifying as the session progressed.

The Dow Jones industrial average closed Tuesday down 345 points, or 1.02%, the S&P 500 index closed down 1.58%, the Nasdaq Composite index closed off 1.98% and the Russell 2000 index fell 2.4%.

There was $80 million in reported convertibles trading volume about one hour into the session and $530 million on the tape about one hour before the market close.

Investment-grade issues continued to dominate the tape with Duke Energy Corp.’s 4.125% convertible notes due 2026 (Baa2/BBB) and Southern Co.’s 3.875% convertible notes due 2025 (Baa2/BBB) accounting for about 20% of the total volume in the space.

Rivian Automotive Inc.’s 4.625% convertible notes due 2029 saw heavy selling pressure on Tuesday with the notes breaking below an 89-handle and contracting dollar-neutral as stock downgrades pile up.

onsemi’s 0.5% convertible notes due 2029 hit a new outright low on a heavy day for stock.

While activity in the issue tempered as the session progressed, Chegg Inc.’s 0.125% convertible notes due 2025 were lower alongside stock after announcing the date of its earnings release and a leadership change.

Investment-grade trades

It was another day of investment-grade trades in the convertibles secondary space with Duke Energy’s 4.125% convertible notes due 2026 and Southern Co.’s 3.875% convertible notes due 2025 dominating the tape.

The notes were unchanged to slightly stronger on an outright basis in the heavy volume.

Duke Energy’s 4.125% convertible notes were trading at 102 versus a stock price of $99.21 early in the session, according to a market source.

The notes were trading at 102.25 versus a stock price of $99.71 in the late afternoon.

There was $29 million in reported volume.

Duke Energy’s stock traded to a low of $98.95 and a high of $100.39 before closing at $99.74, up 0.85%.

Southern Co.’s 3.875% convertible notes due 2025 were trading just shy of 103.5 versus a stock price of $74.08 early in the session.

The notes were seen at 103.375 versus a stock price of $73.96 in the late afternoon.

There was $62 million in reported volume.

Southern Co.’s stock traded between $74.46 and $73.76 before closing at $73.98, a decrease of 0.16%.

Rivian under pressure

Rivian’s 4.625% convertible notes due 2029 were under pressure on Tuesday as downgrades of the EV startup’s stock piled up.

The 4.625% notes sank 2 points outright with stock down 2.5%.

The notes were changing hands at 89.375 versus a stock price of $12.05 in the late afternoon, according to a market source.

The notes contracted on the move down.

There was $15 million in reported volume.

Rivian’s stock traded to a low of $11.96 and a high of $12.28 before closing at $12, a decrease of 2.91%.

Stock was again under pressure after more analyst downgrades with the Battle Road Research analysts downgrading the stock to sell from hold.

The downgrade follows an RBC analyst downgrade and price target cut from the previous week.

onsemi’s new low

onsemi’s 0.5% convertible notes due 2029 were dragged to a new outright low on Tuesday on a heavy day for the company’s stock.

The 0.5% notes were off 2 points outright with stock down about 5%.

The notes were changing hands at 97 versus a stock price $70.73 in the late afternoon, according to a market source.

There was $13 million in reported volume.

onsemi’s stock traded to a low of $70.27 and a high of $73.50 before closing at $70.35, a decrease of 5.42%.

Stock was under pressure alongside the broader semiconductor sector on Tuesday.

Chegg eyed

While activity in the name was limited to a few early session trades, Chegg’s 0.125% convertible notes due 2025 were active with the notes lower alongside stock after announcing the date of its earnings release and a leadership change.

The 0.125% notes were trading at 89.375 versus a stock price of $18.35 early in the session, according to a market source.

There was $5 million in reported volume.

Chegg’s stock traded to a low of $18.05 and a high of $18.43 before closing at $18.06, a 2.06% drop.

The company announced on Tuesday that the president of Chegg Skills resigned from his post.

The online textbook rental, tutoring, scholarship and internship matching company is expected to release earnings on Monday.

Mentioned in this article:

Chegg Inc. NYSE: CHGG

Duke Energy Corp. NYSE: DUK

onsemi Nasdaq: ON

Rivian Automotive Inc. Nasdaq: RIVN

Southern Co. NYSE: SO

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