Secondary rides post-Fed surge; high-grade convertible notes rally; Western Digital hits new heights

By Abigail W. Adams

Portland, Me., Dec. 14 – It was another strong day in the convertible secondary space with buyers flooding the market in a continuation of the post-Fed surge the previous session.

Markets continued to cheer as the Federal Open Market Committee seemingly confirmed the previous session that they had reached the end of their rate-hike campaign and would begin cutting rates in 2024.

Equity indexes added to strong gains from the previous session as Treasury yields continued to fall with small cap stocks the outperformers.

The Dow Jones industrial average closed Thursday up 158 points, or 0.43%, the S&P 500 index closed up 0.26%, the Nasdaq Composite index closed up 0.19% and the Russell 2000 index closed up 2.64%.

Treasuries continued to rally with the 10-year falling 11 basis points to break below a 4-handle and close at 3.91%.

There was heavy volume in the market with $282 million in reported volume about an hour into the session and $733 million in reported volume about one hour before the market close.

The market was bid up across the board with several recent issues hitting new heights, a source said.

Investment-grade convertible notes were in focus with the notes continuing to rally with rate move.

Evergy Inc.’s recently priced 4.5% convertible notes due 2027 (BBB) continued to dominate the tape with the notes hitting a new all-time high.

Ventas Realty, LP’s 3.75% exchangeable notes due 2026 (Baa1/BBB+) also pushed out to new heights in heavy volume.

Western Digital Corp.’s 3% convertible notes due 2028 returned to focus with the notes also hitting a new outright high.

Evergy rises

Evergy’s 4.5% convertible notes due 2027 continued to dominate the tape on Thursday with the notes again setting a new outright high.

The 4.5% notes added 0.5 point outright with stock up early in the session but closing the day flat.

The notes were changing hands just shy of 103.75 versus a stock price of $54.14 shortly before 11 a.m. ET, according to a market source.

They came in alongside stock as the session progressed and were changing hands at 103.25 versus a stock price of $53.41 in the late afternoon.

There was $53 million in reported volume.

Evergy stock traded to a low of $53.26 and a high of $54.40 before closing the day at $53.37, an increase of 0.075%.

Ventas’ new high

Ventas’ 3.75% exchangeable notes due 2026 were traded in heavy volume on Thursday with the notes pushing out to a new outright high.

The 3.75% notes added 2 points outright with stock up more than 4%.

They traded as high as 106.25 versus a stock price of $50.62 early in the session, according to a market source.

The notes were marked at 105.75 versus a stock price of $50.22 in the late afternoon.

There was $26 million in reported volume.

Western Digital’s new high

Western Digital’s 3% convertible notes due 2028 were among the recent issues that were pushed to new heights on Thursday.

The 3% convertible notes added 2 points outright with stock up about 1.5%.

They were changing hands at 105.75 versus a stock price of $50.22 in the late afternoon, according to a market source.

There was $19 million in reported volume.

Western Digital stock traded to a low of $50.90 and a high of $52.23 before closing the day at $51.15, an increase of 1.43%.

Mentioned in this article:

Evergy Inc. Nasdaq: EVRG

Ventas Realty, LP NYSE: VTR

Western Digital Corp. Nasdaq: WDC

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