Morning Commentary: New SolarCity drops outright, dollar neutral; Molycorp 6% stabilizes

By Rebecca Melvin

New York, Sept. 25 – SolarCity Corp.’s new 1.625% convertibles traded lower on both an outright and dollar-neutral basis early Thursday after the San Mateo, Calif.-based clean energy company priced $500 million of the five-year senior notes at the cheap end of talked terms.

SolarCity’s 1.625% convertibles were 98 bid, 98.5 offered versus an underlying share price of $61.90 at late morning, according to a Connecticut-based trader.

Trace data also showed a print at 99.

Traders said those were in about a point on a dollar-neutral basis. The theoretical delta on the issue was 70%.

SolarCity’s older 2.75% convertibles also traded down a point on a dollar-neutral basis. They were down 3 points at 122, according to Trace data.

Stock borrow in the name, which was difficult to begin with, was getting worse, a New York-based trader said.

SolarCity shares were down $1.12, or 1.9%, at $61.81 at 11 a.m. ET.

Elsewhere, Molycorp Inc.’s 6% convertibles due 2017 were trading right round the level to which they had fallen on Wednesday. The bonds were seen around 35. They dropped from about 47 after a holder sold his position in the paper.

“Someone wanted out,” a Connecticut-based trader said of the Molycorp 6% convertibles. The other Molycorp convertibles were not trading, he said.

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