Morning Commentary: Tesla convertibles, stock up as market bets on earnings; OSI Systems on tap

By Stephanie N. Rotondo

Seattle, Feb. 15 – Tesla Inc.’s convertibles were taking some of the focus away from recently priced issues in midweek trading.

The company’s stock has been climbing up toward record highs in recent weeks, as the market attempts to decipher what upcoming earnings will look like. The latest quarterly report, expected Feb. 22, is the first since the closing of the SolarCity merger in November.

While speculation circulates, a market source said Tesla’s 1.25% convertible notes due 2021 were steady to half a point better, trading in a 101 to 101.5 context. The 0.25% convertible notes due 2019 were not as active as the 1.25% convertibles but were also placed in a similar range.

As for the underlying stock (Nasdaq: TSLA), it was up 29 cents at $281.27 at mid-morning.

Because of the uncertainty of how Tesla will include SolarCity figures, estimates for the quarter have been all over the place, swinging from a loss at one desk to a profit at the other.

The market is also hoping to hear an update on the company’s Model 3 rollout.

Meanwhile, OSI Systems Inc. is slated to price its $225 million offering of convertible notes due 2022.

Price talk is for a 1.125% to 1.625% yield and an initial conversion premium of 35% to 40%. Pricing is expected after the close.

BofA Merrill Lynch, Wells Fargo Securities LLC, J.P. Morgan Securities LLC and Jefferies are leading the deal.

Ahead of pricing, the company’s equity (Nasdaq: OSIS) was up 52 cents at $77.25.

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