Morning Commentary: Convertibles trading opens thin; Pinduoduo, Tesla notes active

By Rebecca Melvin

New York, Oct. 28 – Pinduoduo Inc.’s convertibles, which have become a regular feature of trade of late, were active in the early going on Monday, which starts a week likely to be influenced by earnings reports, a rate cut widely expected from the Federal Open Market Committee meeting and month end.

Despite these various influences, the market was not very busy, a New York-based trader said.

This week the FOMC begins its regularly scheduled two-day policy meeting on Tuesday. Earnings continue in full swing, and month end hits on Thursday, which is Halloween.

“There is a lot of stuff going on, but it’s been pretty quiet. It really takes the deals to shake the market up,” the trader said. New issuance has not been forthcoming in the middle of earnings season.

Pinduoduo’s 0% convertibles due 2024 were trading up in step with their underlying shares in the early going and were the top volume name in trade, according to Trace data. The bonds were up 1.7 points to 117.375 versus an underlying share price that was up 70 cents, or 1.7%, at $41.50.

Tesla Inc.’s 2% convertibles due 2024 were also trading actively and were up 1.6 points to 127.75 with shares of the electric carmaker up $5.30, or 1.6%, at $333.36.

ON Semiconductor Corp. reported third-quarter results that boosted the underlying shares of the Phoenix-based semiconductor company by 7% to $20.54 on Monday. The company missed earnings estimates, but results were in line on revenue. The ON 1.625% convertible notes due 2023 were not seen in trade.

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