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Morning Commentary: Investment-grade convertible notes dominate early trading
By Abigail W. Adams
Portland, Me., May 31 – Investment-grade convertible bond issues of 2023 were in focus on Wednesday with equities in the red following the latest JOLTS report, which reflected an unexpected surge in job vacancies.
The Dow Jones industrial average was down 260 points, or 0.78%, the S&P 500 index was down 0.77%, the Nasdaq Composite index was down 0.65% and the Russell 2000 index was down 1.40% shortly before 11 a.m. ET.
There was $110 million of convertible bond trading activity on the tape about one hour into the session with the top four issues accounting for about 50% of the total activity.
Duke Energy Corp.’s 4.125% convertible notes due 2026 (Baa2/BBB), CMS Energy Corp.’s 3.375% convertible notes due 2028 (Baa2), PPL Corp.’s 2.875% exchangeable notes due 2028 (Baa1/BBB+) and FirstEnergy Corp.’s 4% convertible notes due 2026 were the drivers of activity early Wednesday.
While active, there was little movement in price with all now below par.
Duke’s 4.125% convertible notes due 2026 were changing hands at 98.875 early in the session.
There was $18 million in reported volume.
Duke’s stock was trading at $87.95, a decrease of 0.068%, shortly before 11 a.m. ET.
FirstEnergy’s 4% convertible notes due 2026 were seen at 99.375 early in the session.
There was $14 million in reported volume.
While FirstEnergy’s convertible notes are not rated, the company’s credit ratings are investment grade.
There was $14 million in reported volume.
FirstEnergy’s stock was trading at $36.88, a decrease of 0.32%, shortly before 11 a.m. ET.
PPL’s 2.875% convertible notes due 2028 were changing hands at 96 early in the session.
There was $10 million in reported volume.
PPL’s stock was $25.99, a decrease of 0.4%, shortly before 11 a.m. ET.
CMS Energy’s 3.375% convertible notes due 2028 were trading at 99.
There was $8.5 in reported volume.
CMS’ stock was seen at $57.36, an increase of 0.79%, in intraday trading.
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