Convertibles primary market quiet again; Tesla convertibles expand in active trade; Teva lower

By Rebecca Melvin

New York, Oct. 4 – The convertibles primary market remained quiet again on Wednesday as the space gets closer to chalking up a zero in new issuance for the week.

In secondary market action, all three Tesla Inc. convertibles gained outright and improved on swap, a New York-based trader said. The Tesla bonds were actively traded as the paper continued to move higher along with an upswing in the underlying shares – although the shares underperformed the convertibles – following a sharp pullback on Monday.

Tesla’s convertibles and shares fell late Monday after news that deliveries of its Model 3 sedans were delayed due to “production bottlenecks.”

“All three Teslas improved about ¼ point today dollar neutral,” the trader said.

The Tesla 1.25% convertible notes due 2021, known as the B tranche, jumped more than 3 points to more than 116 on Wednesday, after remaining essentially unchanged on Tuesday at 112 to 113.

The Bs “look the most interesting to me and could have a bit more room to expand, while the As and Cs are fully valued here,” the trader said.

The Tesla 0.25% convertibles due 2019, or the A tranche, added about 1.5 points to 112.8 early Wednesday, after gaining 2 to 2.5 points and finishing at 111 to 111.5 on Tuesday.

Tesla’s shares were up $7.61, or 2.2%, last at $355.75.

Teva convertibles lower

Moving in the opposite direction were the convertibles and shares of Teva Pharmaceutical Industries Ltd. after news that competitor Mylan NV received regulatory approval for a generic version of Teva’s Copaxone drug.

The Israel-based drug maker’s convertibles were lower along with a slide in the underlying American Depositary Receipts, but again, the convertibles seemed to hold up a little bit better.

Teva’s 7% mandatory convertible preferreds due 2018 (OTCBB: TEVVF) fell $42.94, or 12%, to $322.06 by the close.

Teva’s 0.25% convertibles due 2026 also saw a more modest pullback compared to shares. They were down to 89 or 90 from recent trades around 91 and 92.

The company’s stock dropped $2.74, or 14.6%, to $16.08.

Teva reports its third-quarter results Nov. 2.

Mentioned in this article:

Tesla Inc. Nasdaq: TSLA

Teva Pharmaceutical Industries Ltd. Nasdaq: TEVA

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