Tesla converts expand; Fortive improves; Anthem active; Trip.com’s yield eyed

By Abigail W. Adams

Portland, Me., Dec. 16 – While Monday was off to a slow start in the convertible secondary space, activity picked up in the afternoon as equities again broke out to record highs.

However, few names saw concentrated trading activity with end-of-year portfolio clean-up a driving force of trading activity, sources said.

There was about $53.5 million on the tape a little over one hour into the session and $323 million in reported volume by midafternoon.

Tesla Inc.’s convertible notes were in focus on Monday as stock soared after a bearish analyst said some kind words about the electric car manufacturer.

The notes were improved on both an outright and dollar-neutral basis.

Anthem Inc.’s 2.75% convertible notes due 2042 were active with the notes again trading above quadruple par.

Fortive Corp.’s 0.875% convertible notes due 2022 remained volume movers with the notes continuing to improve.

Trip.com Group Ltd.’s 1% convertible notes due July 1, 2020 also some saw activity in the secondary space. However, the notes were largely moving sidewise.

Tesla in focus

Tesla’s convertible notes were active and making gains on an outright and dollar-neutral basis as stock soared after a bearish analyst said nice things about the company.

The 1.25% convertible notes due 2021 were among the most heavily traded issues in the secondary space.

The notes rose about 4 points outright and expanded 0.25 point to 0.375 point on swap, sources said.

They were changing hands at 119.625 versus an equity price of $381.08 in the midafternoon.

The 1.25% notes saw more than $20 million in reported volume.

Tesla’s 2% convertible notes due 2024 were also making gains on an outright and dollar-neutral basis.

The notes rose almost 6 points outright to 140.5 – their highest outright level since pricing in May.

The notes were expanded 0.5 point dollar-neutral, a market source said.

About $6 million of the bonds were on the tape by the late afternoon.

While volume was light, Tesla’s 2.375% convertible notes due 2022 also gained on an outright and dollar-neutral basis.

The notes were up more than 7 points to 132.75 and were expanded 0.25 to 0.375 point dollar-neutral, sources said.

Tesla stock traded to a low of $362.50 and a high of $383.61 before closing the day at $381.5, an increase of 6.45%.

Stock jumped after Credit Suisse analyst Dan Levy stated in a note that Tesla was ahead of the competition in areas such as software and electrification with battery capacity far exceeding other electric car manufacturers, Markets Insider reported.

However, Levy maintained his “underperform” rating and target price of $200 per share.

Anthem quadruples

Anthem’s 2.75% convertible notes due 2042 were active in the secondary space with the notes again trading above quadruple par in the high-volume activity.

The 2.75% notes jumped almost 20 points outright.

They were changing hands at 411.625 versus an equity price of $293.87 in the midafternoon.

The notes saw more than $20 million in reported volume.

The 2.75% notes are a “weird” issue, a source said. The notes are mostly held by outright accounts and there has been a wave of outright profit taking as the year draws to a close, the source said.

Barron’s also listed Anthem stock as one to watch in 2020. The notes’ have been cheapening dollar-neutral as stock improves, the source said.

Anthem stock traded as high as $297.78 before closing Monday at $291.78, an increase of 2.7%.

The convertible notes last traded above quadruple par in mid-November, according to Trace data.

Fortive improves

Fortive’s 0.875% convertible notes remained active in the secondary space, as they have been for the past two weeks.

The notes were continuing to improve on Monday.

They were changing hands at 100.875 with more than $7.5 million in reported volume, a market source said.

Fortive stock traded as high as $76.70 before closing the day at $76.16, an increase of 1.29%.

The 0.875% notes have been active in the secondary space for much of December and improving on both an outright and dollar-neutral basis, sources said.

The notes popped above par last Friday. They have traded in the 98 to 99 range since September.

Trip.com’s yield

Trip.com’s 1% convertible notes due July 1, 2020 saw a fresh round of activity on Monday.

The notes from the Shanghai-based provider of travel services that was formerly known as Ctrip.com have seen renewed attention as their maturity date approaches.

The 1% notes were changing hands at 98.625 on Monday with about $6 million in reported volume.

The yield to maturity on the notes is 3.61%, which is pretty good for a short-dated piece of paper “if you trust the company,” a market source said.

The current premium on the notes is also 57%, which is not outrageous, the source said.

Trip.com’s American Depositary Receipts closed Monday at $34.11, an increase of 0.98%.

Mentioned in this article:

Anthem Inc. NYSE: ANTM

Fortive Corp. NYSE: FTV

Tesla Inc. Nasdaq: TSLA

Trip.com Group Ltd. Nasdaq: TCOM

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.