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Morning Commentary: New Western Digital convertible notes strengthen in early trading
By Cristal Cody
Tupelo, Miss., Nov. 1 – Western Digital Corp.’s new upsized $1.4 billion of 3% convertible senior notes due Nov. 15, 2028 priced after the market close on Tuesday dominated early trading on Wednesday.
“They’re up about a point and a quarter, dollar neutral,” a source said. “The stock is up, so they’re actually up 2 points outright.”
Secondary trading topped $130 million over the morning.
Western Digital’s existing 1.5% convertible notes due 2024 (Baa3) declined 0.5 point on $90 million-plus of secondary trading over the morning.
“You have people swapping into the new one and getting out of the old one,” one source said.
Western Digital’s common stock was up 3% as the session got underway.
Overall secondary volume in the convertibles space totaled more than $286 million by around 10:45 a.m. ET.
Stocks were mostly on the run higher early Wednesday with the Russell 2000 index the lone standout and moving down 0.21%.
The S&P 500 index was up 0.58%, the Dow Jones industrial average improved 0.34% and the Nasdaq rose 0.72%.
Western Digital mixed
Western Digital’s $1.4 billion of 3% convertible senior notes were seen at a price of 102.553 and an equity price of $41.24 in heavy trading totaling $131.95 million over the morning, a source said.
The deal was upsized by $100 million and priced on the rich end of yield talk of 3% to 3.5%.
The 30% initial conversion premium came at the rich end of the 25% to 30% talk.
The company’s existing 1.5% convertible notes due 2024 dropped 0.5 point to 98.75 with an equity price of $40.90 on $90 million-plus of secondary trading early Wednesday, a market source said.
Western Digital’s stock rose 3.01% to $41.36 in early trading.
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