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Morning Commentary: Tesla’s new issue remains in focus; Viavi ticks up; Medicines rebounds
By Stephanie N. Rotondo
Seattle, March 20 – Tesla Inc.’s new $850 million issue of 2.375% convertible notes due 2022 continued to be in vogue early Monday, after pricing late Thursday.
A market source saw the paper edging up slightly to 99.5.
The company’s older 1.25% B convertible notes due 2021, however, slipped about ˝ point to 94.5, the source said.
As for the underlying equity (Nasdaq: TSLA), it was up $1.85 at mid-morning, trading at $263.35.
The new deal came upsized from $750 million and with an initial conversion premium of 25%.
Concurrently with the convertibles offering, Tesla also sold $347.4 million in common stock, upsized from $250 million. The equity offering includes a $52.2 million greenshoe.
Proceeds from both sales will be used to strengthen the company’s balance sheet, to further reduce any risks associated with the rapid scaling of the business due to the launch of the Model 3 and for general corporate purposes.
Meanwhile, Viavi Solutions Inc.’s 1% convertible notes due 2024 were seen gaining ground in early dealings.
A source pegged the paper at 104.625, up about a point.
The company’s shares (Nasdaq: VIAV) were also better, firming 18 cents, or 1.68%, to $10.88.
However, there was no fresh news to cause the gains in the name.
And, Medicines Co.’s convertibles – as well as its stock – were moving back into positive territory, after losing ground in Friday’s session in sympathy with Amgen.
The 2.5% convertible notes due 2022 were deemed nearly 5 points better in early trading as the stock (Nasdaq: MDCO) added nearly 3%.
On Friday, the debt dropped about 10 points, with the equity losing about 10%.
The weakness came as Amgen reported disappointing results about its cholesterol drug, Repatha. But Medicines later released a more positive report about its own cholesterol drug, inclisiran. That helped to pare Friday’s losses.
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