Duke Energy dominates convertibles secondary, makes nominal gains; onsemi lower outright

By Abigail W. Adams

Portland, Me., April 4 – It was an active day in the convertible secondary space as $1.5 billion in new supply made its way to the aftermarket.

Duke Energy Corp. priced $1.5 billion of three-year convertible notes (Baa2/BBB) after the market close on Monday.

The new paper hit the secondary space on a down day for equities with equity indexes mixed at the open but falling into negative territory as the session progressed.

The Dow Jones industrial average closed Tuesday down 199 points, or 0.59%, the S&P 500 index closed down 0.58%, the Nasdaq Composite index closed down 0.52% and the Russell 2000 index closed down 1.97%.

There was $536 million on the tape about one hour before the market close with Duke’s new 4.125% convertible notes due 2026 accounting for nearly half of the total reported volume in the space.

The notes made nominal gains on their debut.

The secondary space was largely quiet outside of the new paper with activity concentrated in a few issues.

onsemi’s 0.5% convertible notes due 2029 were lower outright in active volume on a heavy day for stock.

Southern Co.’s 3.875% convertible notes due 2025 (Baa2/BBB) and Alliant Energy Corp.’s 3.875% convertible notes due 2026 (BBB+) continued to weaken on the heels of the latest investment-grade offering.

Duke makes nominal gains

Duke priced $1.5 billion of three-year convertible notes (Baa2/BBB) after the market close on Monday at par with a coupon of 4.125% and an initial conversion premium of 25%.

Pricing came at the midpoint of talk for a coupon of 3.875% to 4.375% and the cheap end of talk for an initial conversion premium of 25% to 30%, according to a market source.

Duke’s new 4.125% convertible notes due 2026 were off to a healthy start with the notes marked at 100.25 bid, 100.625 offered in the gray market.

They came in after the opening bell with the bulk of the notes trading in the 100.125 to 100.25 context, a source said.

However, they gained strength as the session progressed with the notes marked at 100.375 bid, 100.75 offered in the late afternoon.

They made nominal gains on swap, a source said.

The notes dominated activity in the secondary space with $204 million in reported volume.

Duke Energy stock traded to a low of $94.70 and a high of $96.29 before closing the day at $96.23, an increase of 1.2%.

onsemi lower

onsemi’s 0.5% convertible notes due 2029 were lower in active trade on a heavy day for stock.

The notes were down about 1.375 points outright with stock off more than 3%.

The notes were changing hands at 102.5 versus a stock price of $78.84 in the late afternoon.

There was $14 million in reported volume.

onsemi stock traded to a low of $77.84 and a high of $81.51 before closing the day at $78.49, a decrease of 3.27%.

Weaker

Southern Co.’s 3.875% convertible notes due 2025 and Alliant’s 3.875% convertible notes due 2026 continued to weaken on the heels of the latest investment-grade offering from a utility.

The convertible notes were changing hands at 101 versus a stock price of $69.35 in the late afternoon.

There was $25 million in reported volume.

Southern Co. stock traded to a low of $68.72 and a high of $69.66 before closing the day at $69.63, an increase of 0.96%.

Alliant’s 3.875% convertible notes were changing hands at 102.625 versus a stock price of $52.67 in the late afternoon.

There was $14 million in reported volume.

Alliant’s stock traded to a low of $52.48 and a high of $53.21 before closing the day at $52.94, an increase of 0.42%.

Mentioned in this article:

Alliant Energy Corp. Nasdaq: LNT

Duke Energy Corp. NYSE: DUK

onsemi Nasdaq: ON

Southern Co. NYSE: SO

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