Lucid convertible notes in focus following $3 billion stock offering; Alliant below par

By Abigail W. Adams

Portland, Me., June 1 – It was another day of investment-grade trades in the convertibles secondary space on Thursday with high-grade names weaker as investors digested the anticipated passage of the U.S. debt-limit deal and returned focus to rates and recession.

Equity indexes wavered between gains and losses shortly after the opening bell but powered higher to close the day with strong gains.

The Dow Jones industrial average closed Thursday up 153 points, or 0.47%, the S&P 500 index closed up 0.99%, the Nasdaq Composite index closed up 1.28% and the Russell 2000 index closed up 1.06%.

There was $53 million in reported convertibles trading volume about one hour into the session and $553 million on the tape about one hour before the market close.

Investment-grade names continued to dominate the tape with Duke Energy Corp.’s 4.125% convertible notes due 2026 (Baa2/BBB) and PPL Corp.’s 2.875% exchangeable notes due 2028 (Baa1/BBB+) seeing the heaviest volume.

Alliant Energy Corp.’s 3.875% convertible notes due 2026 (BBB+) were also weaker with the notes falling below par for the first time since early March.

While IG issues remained the drivers of trading activity in the secondary space, topical news helped jumpstart activity in certain issues.

Lucid Group Inc.’s 1.25% convertible notes due 2026 were in focus on Thursday with the notes falling outright as stock sank double digits on the heels of a massive follow-on equity offering.

IG weaker

Investment-grade convertible notes again dominated the tape on Thursday with high-grade names weaker.

Duke Energy’s 4.125% convertible notes gave back some outright gains on a red day for stock.

The notes fell 0.25 point outright to 98.875 in the late afternoon, according to a market source.

There was $48 million in reported volume.

Duke’s stock traded to a low of $87.66 and a high of $89.71 before closing at $88.12, a decrease of 1.31%.

PPL’s 2.875% convertible notes due 2028 were also off about 0.25 point outright.

The notes were changing hands at 96 in the late afternoon.

There was $34 million in reported volume.

PPL’s stock traded to a low of $25.94 and a high of $26.29 before closing at $26.10, down 0.38%.

Alliant Energy’s 3.875% convertible notes due 2026 fell below par for the first time since early March.

The notes were down 0.5 point outright to close at 99.875, according to a market source.

There was $12 million in reported volume.

Alliant’s stock traded to a low of $50.28 and a high of $51.73 before closing at $50.91, off 1.07%.

Lucid in focus

Lucid’s 1.25% convertible notes due 2026 were in focus on Thursday as stock nosedived after the company announced a $3 billion follow-on offering.

While down outright, the notes were performing well on hedge, a source said.

The 1.25% convertible notes fell about 1 point outright with stock off more than 15%.

The notes were changing hands at 55.375 early in the session and 55.5 at the market close.

The yield fell to 19.125%.

Despite a massive premium, the notes move on a heavy hedge of 80%, a source said.

They expanded on the move down.

There was $33 million on the tape.

Lucid’s stock traded to a low of $6.20 and a high of $6.82 before closing at $6.50, a decrease of 16.24%.

The EV startup’s stock plunged after the company announced a $3 billion follow-on offering and private placement of common stock.

Lucid is offering 173,544,348 common shares in a follow-on offering, in addition to a private placement of 265,693,703 shares with Saudi Arabia’s Public Investment Fund affiliate Ayar Third Investment Corp., according to a 424B5 filing with the Securities and Exchange Commission.

Mentioned in this article:

Alliant Energy Corp. Nasdaq: LNT

Duke Energy Corp. NYSE: DUK

Lucid Group Inc. Nasdaq: LCID

PPL Corp. NYSE: PPL

© 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.