Morning Commentary: Convertibles secondary space quiet as equity drops; Tesla active

By Abigail W. Adams

Portland, Me., Feb. 24 – The convertibles secondary space saw a quiet start to the day with market players on the sidelines as equities tumbled on renewed concern over the coronavirus and its impact on global growth.

The Dow Jones industrial average, S&P 500 index and Nasdaq composite all launched the day with more than 2% declines.

There were no markets going around as stocks sold off, a market player said. “Everyone’s working on their hedges,” the source said.

Tesla Inc.’s convertible bonds were one of the few names to see concentrated trading activity as stock dropped more than 5%.

However, the bonds were moving in line on a dollar-neutral, or hedged, basis.

The 2% convertible notes due 2024 were changing hands around 248.625 early in Monday’s session with about $10 million in reported volume.

The 2% notes topped triple par last week as stock shot past $900.

Tesla’s 1.25% convertible notes due 2021 dropped more than 10 points outright to 241 with more than $6 million in reported volume.

Tesla’s stock traded to a low of $822.20 early in the session and was changing hands at $854.73, a decrease of 5.08%, shortly before 11 a.m. ET.

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