Fortive active; Medicines pops on trial data; Tesla 2% notes slightly higher with stock

By Rebecca Melvin

New York, Aug. 26 – A good mix of convertibles traded during the session, including biopharmaceuticals, real estate investment trusts, energy, industrial and banking names, on decent volume for a summer Monday.

Fortive Corp. had the distinction of being the top-volume name of the day, according to Trace data, with about $17.26 million of bonds changing hands in the session by late afternoon. In all, there were some $327.5 million of bonds that had traded.

Pricing was mixed as stock indices rallied on a brighter outlook regarding U.S-China trade talks. The change was due primarily to tweets by U.S. president Donald Trump that China will be looking upon a deal more favorably than in the past. The opposite sentiment reined on Friday and was related to Trump comments regarding China and trade that took stocks a leg lower that day.

The Fortive 0.875% notes due 2022 were down 0.125 point despite higher shares.

Medicines Co.’s 2.75% convertibles due 2023 popped by more than 5 points outright amid a 14% surge in the underlying shares after the company revealed that the first phase 3 trial of its drug inclisiran hit its primary endpoints and all secondary objectives. The primary endpoints tracked changes in LDL-C out of 18 months after the start of treatment. The Medicines’ 2.75% bonds were seen to have traded at 104.1.

In addition to the Medicines 2.75% notes, the Medicines 2.5% convertibles due 2022 traded at 126.06 in decent volume. Shares of the Parsippany, N.J.-based biopharmaceutical company gained $4.82, or 14%, to $39.85.

Valaris plc’s 3% notes due 2024 traded in good volume at 70.25 with the stock of the offshore drilling contractor up as much as 8.6% during the session. The stock ended up 21 cents, or 5.16%, to $4.28.

Dallas-based real estate investment trust company Spirit Realty Capital Inc. saw its 3.75% convertibles due 2021 gain nearly 0.5 point to 104 amid a 29 cent, or 0.6%, rise in the underlying shares to $46.17.

Tesla Inc. was in focus early Monday with the electric carmaker’s recently priced 2% convertible notes due 2024 changing hands up nearly 0.25 point outright from previous trades as shares ticked up.

Tesla shares were up about 1% amid reports that the company is adjusting its pricing strategy in China and also considering Germany for a planned European factory. Last week, the shares dropped and its 2% convertibles traded lower as trade concerns weighed on the securities. But Moody’s Investors Service had revised its view on the company to stable from negative last Wednesday. The rating agency said that the outlook was looking stable on improving operating efficiencies of the Model 3, growing regulatory credit sales and an adequate liquidity position, which at $5 billion was considered a positive cushion for the company.

The Tesla 2% convertibles traded last at 94.35, which was up from 94.125 late Friday. Last Wednesday, the paper had traded at high as 98.78, according to Trace data. Tesla’s common stock was up $2.665, or 1.3%, in the early going on Monday at $214.13. The shares closed up $3.60, or 1.7%, to $215.00.

In general, convertibles were buoyed by a rebound in stocks amid a change in sentiment on trade concerns. But Inphi Corp.’s stock was still trading down. Nevertheless, the Inphi 0.75% convertible notes due 2021 were steady in trade. The bonds were last at 126.3, which was flat to better from Friday. The underlying Inphi stock was down 21.5 cents, or 0.4%, at $61.875.

In addition, Cree Inc.’s 0.875% notes due 2023 traded down 3.8 points, to 103.8 as shares of the Durham, N.C.-based manufacturer of lighting and semiconductor products for power and radio frequency applications slumped $3.92, or 8%, to $43.18.

Fortive trades in bulk

The Fortive 0.875% convertible notes due 2022 were active on Monday.

The notes traded at 99.875, which was down 0.125 point on an outright basis.

There were $17 million of the bonds on the tape during Monday’s session.

Fortive stock traded up about 0.6% at late afternoon at $68.80. They closed at their high of the day at $69.14, which was up 77 cents or 1.1%.

A month ago, on July 23, the Everett, Wash.-based diversified industrial conglomerate saw its 0.875% notes trade at 103. There were about $7 million of the bonds on the tape on that Monday session.

Fortive stock had traded as high as $79.19 before closing the day at $78.99.

Mentioned in this article:

Cree Inc. Nasdaq: CREE

Fortive Corp. NYSE: FTV

Inphi Corp. Nasdaq: IPHI

Medicines Co. Nasdaq: MDCO

Spirit Realty Capital Inc. NYSE: SRC

Tesla Inc. Nasdaq: TSLA

Valaris plc NYSE: VAL

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