CenterPoint convertible notes active; Rivian under pressure; EQT gives redemption notice

By Abigail W. Adams

Portland, Me., Jan. 2 – The convertibles primary market launched what is expected to be an active year quietly.

There may be a lull in activity in the early weeks of 2024 with earnings season blackouts preventing deals from coming to market.

However, the primary market is expected to see an active first quarter.

Meanwhile, it was an equally quiet start to the new year in the secondary space on Tuesday as equity and Treasury markets gave back some gains from the phenomenal rally into the final weeks of 2023.

Equity indexes were mixed with the tech-heavy Nasdaq deep in the red as the Dow Jones industrial average wavered between gains and losses throughout the session before closing in positive territory.

The Dow closed up 26 points, or 0.07%, the S&P 500 index closed down 0.57%, the Nasdaq Composite index closed down 1.63% and the Russell 2000 index closed down 0.72%.

There was $50 million in reported convertible bond trading volume about one hour into the session and $378 million on the tape shortly before the market close.

Investment-grade issues continued to drive trading volume with CenterPoint Energy Inc.’s 4.25% convertible notes due 2026 (Baa2) among the largest volume movers of the session although with little movement in price.

However, topical news drove large price movements in Rivian Automotive Inc.’s convertible notes, which sank alongside stock after the EV-maker released fourth-quarter delivery numbers.

News that EQT Corp. was calling its 1.75% convertible notes due 2026 sparked some activity in the issue with the deep-in-the-money notes trading around parity.

CenterPoint active

CenterPoint Energy’s 4.25% convertible notes due 2025 were among the top traders of Tuesday’s session although with little movement in price.

The 4.25% notes were largely unchanged outright on a strong day for stock.

The notes were trading at 100.875 versus a stock price of $29.02 in the late afternoon, according to a market source.

There was $10 million in reported volume.

CenterPoint’s stock traded to a low of $28.40 and a high of $29.06 before closing at $29.01, up 1.54%.

Rivian’s delivery

Rivian’s convertible notes were under pressure on Tuesday as stock dropped after the company reported delivery numbers.

The 4.625% convertible notes due 2029 and 3.625% convertible notes due 2030 both fell about 8.5 points outright with stock off 10%.

The 4.625% convertible notes due 2029 were trading at 132.125 versus a stock price of $21.52 early in the session, according to a market source.

There was $2 million in reported volume.

The 3.625% convertible notes due 2030 were trading at 114.375 versus a stock price of $21.68 early in the session.

They were trading at 114.125 versus a stock price of $21.14 in the late afternoon.

There was $8 million in reported volume.

Rivian’s stock traded to a high of $21.94 and a low of $20.76 before closing at $21.10, down 10.06%.

Rivian reported fourth-quarter deliveries of 13,972, which was about a 10% decrease from the previous quarter.

EQT’s call

EQT’s 1.75% convertible notes due 2026 saw a bout of activity after the company issued a call for the notes.

The deep-in-the-money 1.75% notes were trading around parity following the announcement.

They were wrapped around 268 heading into the market close, according to a market source.

There was $8 million in reported volume.

EQT’s stock traded to a low of $38.58 and a high of $39.32 before closing at $38.92, up 0.67%.

The company announced on Tuesday it would redeem the notes at par on Jan. 17.

The call was a smart one with the company cleaning up its balance sheet and forcing the conversion of the notes, a source said.

EQT is a strong candidate for a return to the convertibles market for a capital raise with the company’s equity in a position of strength, the source said.

Mentioned in this article:

CenterPoint Energy Inc. NYSE: CNP

EQT Corp. NYSE: EQT

Rivian Automotive Inc. Nasdaq: RIVN

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