Morning Commentary: American Water exchangeables lower as markets slump

By Abigail W. Adams

Portland, Me., July 6 – It was a soft start to the day in the convertibles secondary space with equities and Treasuries under pressure on the heels of a blockbuster JOLTS report that took markets by surprise.

Investment-grade convertible notes were under pressure as Treasury yields shot to a multi-year high with the strength of the labor market solidifying expectations for additional rate hikes.

The Dow Jones industrial average was down 473 points, or 1.45%, the S&P 500 index was down 1.29%, the Nasdaq Composite index was down 1.37% and the Russell 2000 index was down 2.29% shortly before 11 a.m. ET.

The two-year Treasury yield jumped 13 basis points to 5.07% and the 10-year Treasury yield shot up 12 bps to 4.05% shortly before 11 a.m. ET.

American Water Capital Corp.’s 3.625% exchangeable notes due 2026 (Baa1/A-), the last deal to clear the primary market, were weaker under the heavy market conditions.

The 3.625% notes fell back to a par handle with the notes changing hands at 100.75 in early trade, according to a market source.

There was $5 million in reported volume.

American Water’s stock was changing hands at $143.15, a decrease of 1.14%, 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.