Tone improves as equities rebound; short-duration, investment-grade convertibles eyed

By Abigail W. Adams

Portland, Me., March 13 – After one of the worst weeks for the convertibles secondary space since 2008, the sky cleared and the bloodletting ceased.

The tone of the market was dramatically improved as equities rebounded due to increased confidence in the government response to the coronavirus pandemic.

The Dow Jones industrial average closed the day up 9.36%, the S&P 500 index up 9.29% and the Nasdaq composite up 9.34% with Congress on the verge of rolling out a bipartisan spending package to minimize the economic impact of the virus.

However, trading volume remained muted with many market players riding out the storm and waiting for their holdings to recover, a source said.

There was $63 million in reported volume about one hour into the session and $570 million heading into the market close.

Investment-grade and short-duration paper remained in demand – a theme throughout the volatility that has roiled markets.

ON Semiconductor Corp.’s convertible notes were active with holders appearing to switch between the long- and short-duration notes.

NextEra Energy Partners LP’s 1.5% convertible notes due Sept. 15, 2020 saw a slight rebound in active trading after tanking on Thursday.

Booking Holdings Inc.’s convertible notes and Fortive Corp.’s 0.875% convertible notes due 2022 continued to top the volume charts, as they have for much of the week.

ON Semiconductor active

ON Semiconductor’s convertible notes were active on Friday with holders appearing to switch from the short-duration to the long-duration notes.

After closing out the previous session below par, ON’s 1% convertible notes due Dec. 1, 2020 gained almost 3 points outright with stock up more than 5%.

The 1% notes were changing hands just shy of 102 early in the session and were changing hands at 101.75 versus a stock price of $13.57 in the late afternoon, according to a market source.

The notes saw about $10 million in reported volume during Friday’s session.

ON’s 1.625% convertible notes due 2023 were also active with the notes up about 2.5 points outright.

They were changing hands just shy of 105.75 versus a stock price of $13.57 in the late afternoon.

The bonds saw about $7 million in reported volume during Friday’s session.

ON Semiconductor stock traded to a low of $12.95 and closed the day at its intraday high of $14.49, an increase of 12.06%.

The manufacturer of semiconductor components lowered its first-quarter revenue guidance on March 6 due to the impact of the coronavirus outbreak.

NextEra rebounds

NextEra Energy’s 1.5% convertible notes due Sept. 15, 2020 saw another day of active trading with the notes paring their losses from the previous session.

The 1.5% convertible notes were up about 1 point outright to 98.75 early in Friday’s session. They climbed another 1 point as the session progressed and stood poised to close the day at 99.75.

The notes saw about $14.5 million in reported volume.

NextEra stock traded to a low of $45.32 and a high of $48.99 before closing the day at $47.31, an increase of 5.23%.

The notes plunged almost 8 points to 97 during Thursday’s session.

Volume movers

Booking Holdings’ convertible notes and Fortive’s 0.875% convertible notes due 2022 continued to top the volume charts on Friday, as they have for much of the week.

Booking’s soon-to-mature 0.35% convertible notes due June 15, 2020 were changing hands around 110 versus a stock price of $1,344.99 in the late afternoon.

The notes saw about $21 million in reported volume during Friday’s session.

The 0.9% convertible notes due 2021 were changing hands at 105.375 versus a stock price of $1,307.68 in the late afternoon with about $16.5 million in reported volume.

Booking stock traded to a low of $1,270.87 and a high of $1,421.67 before closing the day at $1,421.33, an increase of 11.01%.

Fortive’s 0.875% convertible notes due 2022 continued to change hands around 96.25. The bonds saw about $17 million in reported volume during Friday’s session.

Fortive stock traded to a low of $54.93 and a high of $59.75 before closing the day at $59.73, an increase of 7.18%.

Fortive’s 0.875% convertible notes due 2022 and Booking Holdings’ convertible notes are large liquid issues with investment-grade ratings.

Mentioned in this article:

Booking Holdings Inc. Nasdaq: BKNG

Fortive Corp. NYSE: FTV

NextEra Energy Partners LP NYSE: NEP

ON Semiconductor Corp. Nasdaq: ON

© 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.