Exact Sciences exchanges; NextEra active; Western Digital, Super Micro convertibles gain

By Abigail W. Adams

Portland, Me., April 11 – The convertibles primary market stood poised for its second consecutive week with no new issuance with earnings season blackouts and uncertain markets a wet blanket for dealmaking.

Sources expect the primary market to remain subdued throughout April although deals are in the works with May expected to be a busy month.

While Rule 144A convertible offerings are expected to be light in the weeks ahead, issuers continue to address their balance sheets with buybacks and exchanges.

Exact Sciences Corp. became the latest company to issue new convertible notes through an exchange agreement with holders of its outstanding notes although the newly issued notes were not active on Thursday.

Meanwhile, the secondary space remained quiet on Thursday although the market firmed after the heavy selling the previous session.

Equity indexes were higher with Treasuries flat as markets digested the latest round of macro data after Wednesday’s Consumer Price Index report called into question the Fed’s rate cut path.

The Producer Price Index report came in softer than expected on a monthly basis while still reflecting a large annual gain.

The weekly jobless claims released on Thursday came in below expectations, reflecting the resilience of the labor market.

While tech stocks led a rebound in equities, the macro data continued to feed into doubts about the number of rate cuts to expect in 2024, a source said.

The Dow Jones industrial average closed Thursday down 2 points, or 0.01%, the S&P 500 index closed up 0.74%, the Nasdaq Composite index closed up 1.68% and the Russell 2000 index closed up 0.69%.

There was $435 million in reported volume about one hour before the market close with investment-grade issues again dominating the tape.

NextEra Energy, Inc.’s 3% convertible notes due 2027 (Baa1/BBB+) remained the top volume mover of the session with the notes improved in the activity.

Super Micro Computer Inc.’s 0% convertible notes due 2029 and Western Digital Corp.’s 3% convertible notes due 2028 were also on the rise with tech stocks hot on Thursday.

Exact Sciences exchanges

Exact Sciences became the latest convertible issuer to issue new notes through a privately negotiated exchange with existing holders.

The company issued $620.7 million new 1.75% convertible notes due 2031 in exchange for $359.7 million in principal of the 0.375% convertible notes due 2028 and payment to the company of $266.8 million in cash.

The exchange was an interesting one with the 0.375% convertible notes due 2028 not in immediate need of refinancing and the conversion premium on the notes about 70%, a source said.

However, the exchange enabled the company to raise additional capital and extend the maturity of its notes.

The new 1.75% convertible notes due 2031, which priced with an initial conversion premium of 35%, were not active on Thursday.

Exact Sciences’ stock has seen a strong run recently with stock up about 20% over the past month, which lifted its outstanding convertible notes.

NextEra improves

NextEra’s 3% convertible notes due 2027 continued to top the volume charts on Thursday with the notes improved in heavy volume.

The notes were changing hands at 107.325 early in the session, a source said.

They were trading at 107.125 versus a stock price of $64 in the late afternoon.

NextEra’s stock traded to a low of $63.32 and a high of $64.79 before closing at $63.94, down 0.11%.

Tech gains

Super Micro’s 0% convertible notes due 2029 and Western Digital’s 3% convertible notes due 2028 were on the rise in active trade on Thursday with tech stocks lifting the Nasdaq to fresh heights.

Super Micro’s 0% convertible notes due 2029 were up about 1.5 points outright with stock up about 3%.

They were trading at 106.125 versus a stock price of $933 in the late afternoon, a source said.

There was $14 million in reported volume.

Super Micro’s stock traded to a low of $907.19 and a high of $945.36 before closing at $937.28, up 3.16%.

Western Digital’s 3% convertible notes due 2028 were up 2 points outright with stock up about 2%.

They were trading at 154.375 versus a stock price of $73 in the late afternoon.

There was $14 million in reported volume.

Western Digital’s stock traded to a low of $71.94 and a high of $74.18 before closing at $73.90, up 2.28%.

Mentioned in this article:

Exact Sciences Corp. Nasdaq: EXAS

NextEra Energy, Inc. NYSE: NEE

Super Micro Computer Inc. Nasdaq: SMCI

Western Digital Corp. Nasdaq: WDC

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