Tesla Motors’ convertible bonds head higher as analysts speculate on future; EZCorp gains

By Stephanie N. Rotondo

Seattle, July 12 – Tesla Motors Inc. was trading actively – and better – in the convertible bond market on Tuesday.

The gains came as Morgan Stanley analysts speculated on what Elon Musk’s new “secret master plan” could be. In their opinion, Musk could very well be looking at repositioning his auto company into a public transport company – a move the analysts believe the company is well positioned for.

The 1.25% convertible notes due 2021 were trading in an 84.75 to 84.875 context at midday, ultimately closing just north of 85. That compared to a stock price of $226.06, which was up $1.28.

However, the equity did trade off by the bell, ending down 13 cents at $224.65.

The gains also came despite reports that the Securities and Exchange Commission was investigating the company over a potential breach of securities laws. The probe centers on a May 7 crash involving a Tesla vehicle that was driving on auto-pilot. The accident killed the driver.

While Tesla did notify the National Highway Traffic Safety Administration of the incident, it failed to disclose the information to investors.

EZCorp remains strong

A trader said EZCorp Inc.’s 2.125% convertible senior notes due 2019 were “trading again” on Tuesday.

He saw the issue moving higher, placing it at 90.5 bid, 90.75 offered against a stock price of $9.50.

The equity closed at $9.66, up 42 cents, or 4.55%.

“That stock continues to rally,” he said.

The gains came as EZCorp said it had sold its Mexican Grupo Finmart stake to AlphaCredit for $50 million.

EZCorp, an Austin-based pawn shop operator, said two weeks ago that it was selling off its over 95% stake in Grupo Finmart, which makes consumer loans to employees of the Mexican government. On that initial announcement, the company’s stock popped, taking its convertible debt with it.

B2Gold trades up

Another notable name in Tuesday trading was B2Gold Corp., according to a trader.

The Vancouver, B.C.-based gold producer’s 3.25% convertible senior notes due 2018 don’t typically trade all that frequently, the trader said, “but now they are trading a lot more often.”

He said the recent surge in activity is due in part to the Brexit, which pushed investors in gold and gold-linked securities. Despite gold’s slight decline on Tuesday – the commodity dropped about 1.7% on the day – the bonds traded as high as “105 and change,” the trader said. By comparison, the paper was trading in an 87 to 90 context in April.

“The stock’s had a nice run,” the trader added, though he noted that it had come in with the weakness in gold.

The stock dipped 9 cents, or 2.96%, to $2.94.

Mentioned in this article:

B2Gold Corp. NYSE: BTG

EZCorp Inc. Nasdaq: EZPW

Tesla Motors Inc. Nasdaq: TSLA

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