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Morning Commentary: NextEra equity units price, trade down on secondary market debut
By Abigail W. Adams
Portland, Me., Sept. 15 – It was another active day in the convertibles secondary space as the first mandatory convertible deal of the year made its aftermarket debut.
NextEra Energy Inc. priced $2 billion of three-year $50-par equity units after the market close on Wednesday with a fixed coupon of 6.926%, a fixed threshold appreciation premium of 25% and a reoffer price of $48.75.
Pricing came in line with talk for a fixed coupon of 6.926%, a fixed conversion premium of 25% and at the cheap end of talk for a reoffer price of $48.75 to $49.25, or 97.5% to 98.5% of par.
The new paper struggled out of the gate on another volatile day for equity markets.
The notes traded as low as $47.85 pre-open but pared their losses with equity markets turning positive early in the session.
The notes were changing hands at $48.5 in heavy volume about one hour into the session, a source said.
NextEra’s stock was trading at $86.24, a decrease of 2.98%, shortly before 11 a.m. ET.
Equity markets continued to waver between gains and losses with indexes opening in the red, climbing into positive territory in early trading, but succumbing to selling pressure and again turning negative shortly before 11 a.m. ET.
The Dow Jones industrial average was down 102 points, or 0.33%, the S&P 500 index was down 0.91%, the Nasdaq Composite index was down 1.33% and the Russell 2000 index was down 0.63% shortly before 11 a.m. ET.
Outside of new paper from NextEra, the convertibles secondary space was quiet with $64 million in reported volume for convertible bonds about one hour into the session.
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