Morning Commentary: Convertibles quiet; yield plays in focus; Spotify, NextEra active

By Abigail W. Adams

Portland, Me., March 31 – The convertibles secondary space stood poised to close the week as it began – quietly but on firm footing.

The tone in the market continued to improve as equity indexes extended their gains on the heels of a softer-than-expected Consumer Price Expenditure report.

The Dow Jones industrial average was up 185 points, or 0.55%, the S&P 500 index was up 0.56%, the Nasdaq Composite index was up 0.77% and the Russell 2000 index was up 1.28% shortly before 11 a.m. ET.

There was $61 million on the tape about one hour into the session with few names seeing concentrated trading activity.

Outright buyers remained active in the secondary market with convertibles trading with high bond floors in demand, a source said.

Spotify Technology SA’s 0% exchangeable notes due 2026 were active with the notes improved early in the session.

The 0% notes were changing hands at 84 versus a stock price of $132.15 early in the session, according to a market source.

The yield was about 6%.

There was $4 million in reported volume.

Spotify’s stock was trading at $132.17, an increase of 1.01%, shortly before 11 a.m. ET.

NextEra Energy Partners LP’s 0% convertible notes due June 15, 2024 were also active although with little movement in price as their maturity approaches.

The notes were seen just north of 92.75 for a yield of about 6.375% early in the session.

There was $4 million in reported volume.

NextEra’s stock was $58.79, an increase of 1.47%, shortly before 11 a.m. ET.

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