Morning Commentary: Tesla Motors up in active trade; Chesapeake Energy quiet despite lower stock

By Rebecca Melvin

New York, March 19 – Tesla Motors Inc.’s convertibles were trading up in active dealings early Thursday and Anthem Inc.’s 2.75% convertible bonds due 2042 remained a feature of trading, holding steady to slightly lower after shares of the Indianapolis-based health benefits company jumped post Wednesday’s Federal Reserve announcement.

Tesla’s 1.25% convertibles due 2021 added about 1.5 points to 86.75, according to Trace data, and the Tesla 1.5% convertibles due 2018 were up 5.3 points at 171.29.

Tesla’s stock was up $1.05, or 0.5%, at $201.76.

The electric car maker received positive feedback from analysts at RW Baird, who said they are more comfortable with delivery guidance and the Model X debut in the third quarter after recent meetings with management. Baird has an outperform rating on Tesla and a price target of $275.

Chesapeake Energy Corp.’s convertibles were mostly quiet despite a decline in the company’s shares in the early going after Sterne Agee downgraded the Oklahoma City-based energy company to underperform and lowered the share price target to $9, citing questionable capital allocation and a free cash flow deficit.

Chesapeake’s 2.5% convertibles due 2037 went out Wednesday at 96, according to Trace data, and weren’t seen to have traded by mid-morning Thursday.

The Chesapeake 2.25% convertibles due 2038 were seen last around 91.

Chesapeake shares were down 61 cents, or 4.3%, at $13.52 on Thursday morning.

The convertibles primary market remained quiet again early Thursday as has been the case all week. A lack of new paper seems to have dampened action in the secondary market, sources said.

One theory for why the primary has been quiet it that issuers didn’t want to price ahead of the Federal Reserve’s latest monetary policy statement on Wednesday.

But, one trader said, “There hasn’t been a real reason why there hasn’t been new issuance.”

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