Primary quiet; high-grade convertibles mostly higher; NextEra, Duke up; Southern lower

By Cristal Cody

Tupelo, Miss., April 4 – High-grade energy convertible paper led secondary action Thursday, while the primary market continued to take a breather.

Around $85 million of investment-grade energy paper was traded in just three names over the session.

NextEra Energy, Inc.’s 3% convertible notes due 2027 (Baa1/BBB+) led the pack on over $32 million traded over the morning and nearly $54 million by late afternoon. The notes were more than 1 point better but gave back some of the gains by the afternoon and were trading around 0.75 point higher.

NextEra’s 3% convertible notes have been “very active over the past month,” a source said.

Duke Energy Corp.’s 4.125% convertible notes due 2026 (Baa2/BBB) were edging higher on $10 million of paper traded over the morning and $16 million by late afternoon.

Most of the high-grade convertible energy paper was moving higher Thursday with the exception of notes from Southern Co., a source said.

Southern’s 3.875% convertible notes due 2025 (Baa2/BBB) were down less than 0.125 point in early trading but softened over 0.75 point by the afternoon.

High-grade oil stocks and bonds were active on the spike in the WTI crude futures for May, a source reported.

Futures were volatile and jumped to a high of 87.22 over the day on a range of 84.64 to 87.22 during the session. Futures closed Wednesday at 85.43.

West Texas Intermediate crude oil benchmark futures for May delivery settled Thursday $1.16 higher at $86.59 a barrel.

Overall convertibles secondary trading volume was headed toward $200 million from the morning trade and rose to nearly $680 million by late afternoon.

“The secondary has been quiet,” a source said.

The lighter action could be attributed to the lack of supply in the dollar convertibles primary market so far in April, sources reported.

“No issuance this week,” one source said. “Quiet one.”

The convertibles primary market has been quiet for a week now.

“The primary’s not had deals since last Tuesday,” another source noted. “Secondary volumes have been pretty light over the past week and down around 30%. The lack of new issuance hasn’t helped.”

Stock indexes were mixed by late morning and dove by the close.

The S&P 500 fell 1.23%, the Dow Jones industrial average declined 1.35%, the Nasdaq closed down 1.4% and the Russell 2000 declined 1.08%.

NEE notes jump

NextEra Energy’s 3% convertible notes due 2027 (Baa1/BBB+) were more than 1 point better late Thursday morning at just under 107 with a stock price of $63.46, a source said.

Trading had climbed past $32 million.

By late afternoon, the issue had pulled back and was going out around 0.75 point higher and trading just under 106.75 with an equity price of $63.44.

Secondary action was nearly $54 million headed into the close.

NextEra’s stock traded over 2% higher Thursday morning at $63.81, up from the initial day’s low of $62.99.

The Juno Beach, Fla.-based energy company’s stock closed up 1.89% to $63.73.

Duke Energy edges up

Duke Energy’s 4.125% convertible notes due 2026 (Baa2/BBB) were trading around a dime better near the 98.75 range with an equity price of $95.89 late Thursday morning, a source reported.

Trading topped $10 million in the issue.

Duke Energy’s notes held mostly steady over the afternoon and were going out around the 98.75 area with an equity price of $96.11 on $16 million of paper traded.

Duke Energy shares traded around 0.15% better at $96.11 early Thursday with the shares trading in a range of $95.59 to $96.87.

The Charlotte, N.C.-based power company’s stock closed 0.16% higher at $96.12.

Southern softens

Southern’s 3.875% convertible note’s due 2025 (Baa2/BBB) slipped less than 0.125 point early Thursday to trade around the 99.25 area versus an equity price of $71.26, a source said.

Trading was steady on $5 million of activity over the morning.

The notes declined further by late in the day and were quoted more than 0.75 point weaker around the 98.50 area with an equity price of $69.91.

Volume was over $5 million.

Southern’s stock declined 0.85% in early trading to $70.38, near the low of the morning’s trade range of $70.21 to $71.34.

The Atlanta-based utility’s stock declined 1.31% to $70.05.

Mentioned in this article:

NextEra Energy, Inc. NYSE: NEE

Duke Energy Corp. NYSE: DUK

Southern Co. NYSE: SO

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