Morning Commentary: Enphase Energy convertible notes active early as stock tanks

By Abigail W. Adams

Portland, Me., Oct. 27 – The convertibles secondary space saw another quiet start to the day as markets digested mixed earnings and the latest piece of inflationary data.

Treasuries were flat and equity indexes mixed early Friday with September’s Personal Consumption Expenditure report coming in largely in line with expectations.

The Dow Jones industrial average was down 93 points, or 0.28%, the S&P 500 index was up 0.17%, the Nasdaq Composite index was up 0.91% and the Russell 2000 index was down 0.78% shortly before 11 a.m. ET.

While the broader market was quiet, earnings-related news continued to spark movement in certain credits with Enphase Energy Inc.’s convertible notes in focus.

The convertible notes were mixed as stock plunged double digits on the heels of mixed earnings and disappointing guidance.

Enphase’s 0% convertible notes due 2028 dropped 2.5 points outright to trade at 74.75 early in the session, according to a market source.

However, its shorter-duration 0% convertible notes due 2026 were largely unchanged with the notes continuing to trade around 85.5.

Enphase’s stock plunged to a new 52-week low of $79.96, a decrease of 16.80%, shortly before 11 a.m. ET.

Stock fell after the solar energy company reported mixed earnings with the company missing on the top line but beating on the bottom.

Enphase reported earnings per share of $1.02 versus expectations for earnings per share of $1.00.

Revenue was $551 million versus the $566.8 million expected.

However, the sell-off was sparked by weak guidance with sales figures further warning of a slowdown in the sector.

While Enphase’s convertible notes were mixed on Friday, they have been on a strong downtrend since industry peer SolarEdge Technologies Inc. slashed its revenue forecasts and warned about slowing demand last Friday.

Enphase’s 0% convertible notes due 2028 and 0% convertible notes due 2026 have fallen 5.5 points and 2 points outright since SolarEdge’s warnings.

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