Midday Commentary: Tesla regains par; Omnicare holds just under par; Cowen convertibles on tap

By Rebecca Melvin

New York, March 4 - U.S. convertibles were quiet to start the session Tuesday as equities rebounded from Monday's losses following comments by Russian president Vladimir Putin that relieved worries over the conflict in Ukraine's Crimea region.

Other than a few trades of Tesla Motors Inc.'s two new convertibles, "the morning has been very quiet," a New York-based trader said.

The new bonds recovered to par, with the longer-dated Tesla 1.25% convertibles trading at 100.125 bid, 100.75 offered versus an underlying share price of $258.00, the trader said.

That was better compared to about 98.625 versus the underlying share price of $250.50 late Monday and following a drop toward the mid 90s since Friday when the new paper debuted.

Tesla shares were up $3.68, of 1.5%, at $254.32 early Tuesday.

Market players say there is simply too much supply of the Tesla paper, especially the B tranche, which was upsized to $1.2 billion from $800 million, and came together with its sister tranche for another $800 million.

Elsewhere, Omnicare Inc.'s 3.5% convertible senior notes due 2044 continued to trade and were mostly steady after slipping below par on Monday amid weakness in the underlying shares of the Cincinnati-based pharmaceutical service company.

In the primary, Cowen Group Inc.'s $125 million of five-year convertibles were seen pricing after the market close. The deal was launched late Monday and talked at a coupon of 2.5% to 3% with an initial conversion premium of 27.5% to 32.5%.

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