Morning Commentary: New Universal American quiet in aftermarket; Tesla drops, SolarCity adds

By Rebecca Melvin

New York, June 22 – There was a new issue in the market on Wednesday, namely Universal American Corp.’s new $100 million of 4% convertibles, but most of the market’s attention was on Tesla Motors Inc.’s convertibles after the electric car company offered to buy sister company SolarCity Corp. for $26.50 to $28.50 per share, or about $2.6 billion to $2.8 billion, a New York-based trader said.

Tesla’s chief executive officer, Elon Musk, is also the chairman of SolarCity, and he owns 19% of Tesla and 22% of SolarCity. Musk has recused himself from voting on the deal.

Universal American’s new 4% convertibles were not heard in early trade after the White Plains, N.Y.-based health care company priced $100 million of the five-year senior notes at terms that had been fixed before marketing. Shares of the company were down 8%.

But the convertibles of Tesla Motors and SolarCity’s 1.625% bond were active on the takeout news. The Tesla convertibles were lower on an outright basis as shares fell. SolarCity’s convertibles were up.

The Tesla 1.25% convertibles due 2021, or the B convertibles, traded actively between 83.5 and 86, which was down from 90 to 91 previously.

Shares dropped $19.00, or 5.7%, at $200.76.

The Tesla A convertibles, or 0.25% convertibles due 2019, were trading at 88.75 to 89, which was down from about 93 previously.

The Tesla 1.5% convertibles due 2018, or the “olds,” dropped to 164 to 165 from about 176 on Tuesday.

SolarCity’s convertibles were moving in the opposite direction. SolarCity’s 1.625% convertibles were trading actively around 72 initially and then at 70. That is about 12% to maturity, a New York-based trader said.

The SolarCity 2.75% convertibles were quiet.

SolarCity common shares were up $1.89, or 9%, at $23.08.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.