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Morning Commentary: Wayfair convertible notes ‘taken to the woods’; NextEra weakens
By Abigail W. Adams
Portland, Me., Sept. 16 – New paper continued to drive convertibles trading activity in the secondary space on Friday as heavy selling in equities continued to drag down the market.
The Dow Jones industrial average was down 273 points, or 0.87%, the S&P 500 index was down 1.14%, the Nasdaq Composite index was down 1.48% and the Russell 2000 index was down 1.59% shortly before 11 a.m. ET.
“Reality is setting in,” a source said. “They’re going to keep raising rates.”
Market expectations for a slowdown in rates were dashed by Tuesday’s hotter-than-expected inflation report with equity markets plummeting and credit spreads blowing out as the market upwardly revised its Federal Funds rate targets.
The forecasts for restrictive financial conditions sparking a recession increased following FedEx’s stark warning as it slashed its guidance for its upcoming earnings.
Wayfair Inc.’s new 3.25% convertible notes due 2027 were “taken to the woods” on Friday with the notes plunging below par outright after previously having traded as high as 111 on Monday.
The notes were down 6 points outright with stock off more than 4% early in the session.
They were changing hands at 97.5 versus a stock price of $46.91 early in the session.
There was $8 million in reported volume.
Wayfair’s stock was seen at $46.34, a decrease of 4.30% shortly before 11 a.m. ET.
NextEra Energy Inc.’s 6.926% equity units were also weaker in active trading.
The units were down about 0.5 point to change hands in the $48 to $48.5 context early in the session.
NextEra’s stock was trading at $85.60, a decrease of 0.51%, shortly before 11 a.m. ET.
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