Tesla aims for biggest U.S. automaker, convertibles rise; DISH improves; Cobalt firm

By Stephanie N. Rotondo

Seattle, April 10 – Tesla Inc. was one of the day’s volume leaders in convertible bond market trading, a sellside source reported on Monday.

However, he noted that liquidity overall was quite subdued, given that it is a shortened holiday week.

Tesla’s 2.375% convertible notes due 2022 were expanding with the stock in early dealings, as it was reported that the electric car marker had surpassed both General Motors Co. and Ford Motor Co. to become the largest U.S. automaker, based on market worth.

Another active name was DISH Network Corp., as its equity was boosted by news that AT&T Inc. was buying Straight Path Communications Inc. in an all-stock deal valued at $1.25 billion. That equates to $95.63 per share, an over 162% premium over Straight Path’s closing share price on Friday.

DISH was gaining on the news because like Straight Path, it has an array of unused spectrum that wireless carriers may want as they look to build out their 5G systems.

Meanwhile, Cobalt International Energy Inc.’s 2.625% convertible notes due 2019 were holding steady around 43.

The 3.125% convertible notes due 2024 were also unchanged around 30.

The oil producer’s stock dipped a nickel, or 7.36%, to 58 cents.

Cobalt has been actively heading higher of late, however, as the market ponders what will become of the company: Will it shed some assets to focus on core assets? Or will it be forced to sell itself entirely?

In mid-March, Cobalt said it was looking into all of its options, but as of yet, there has been no word on how things are going.

One sellsider said the company’s Gulf of Mexico assets “would probably come very close to paying off their debt.” If such a sale occurred – as well as a sale of the Angolan assets – Cobalt would be left “a shell of a company.”

“But these guys are good at finding oil,” the source remarked. So all might not be lost.

“There’s a lot of coverage here,” the source said. “The geopolitical concerns [surrounding its Angolan assets] are worrying people more than they should.”

Tesla drives up

Tesla convertibles were active in an otherwise lackluster trading day, according to one New York-based trader.

The trader placed the convertibles in a 111.5 to 111.75 context, against a stock price of $312.00.

Another source echoed that level, calling the paper up a deuce.

For its part, the equity was up over 3% for the day.

The gains in the convertibles – and the stock – came as the company’s market value moved above – or near – that of Ford and GM.

As of Monday’s close, Tesla’s stock was at $312.39, equaling a market value of $50.95 billion. Ford’s market cap was $44.58 billion.

GM’s was $51.18 billion, just narrowly above where Tesla’s ended.

The upward move in stock price and market cap was due to news last week that Tesla, a Palo Alto, Calif.-based car manufacturer, had delivered more vehicles in the first quarter than expected.

DISH does well

DISH Network’s 2.375% convertible notes due 2024 were gaining momentum on Monday in the wake of M&A news in the wireless spectrum space.

One trader pegged the convertibles around 102.75 shortly ahead of the close. That was up over a point on the day.

Another source saw the issue in a 102.75 to 103 context, which compared to levels around 101.5 on Friday.

The underlying stock meantime added $1.06, or 1.69%, to close at $63.61.

On Monday, it was reported that AT&T was buying Straight Path Communications in an all-stock deal – and at an over 160% premium. But the deal is being touted as an example of the exorbitant prices mobile carriers might be willing to pay for unused – and hard to find – spectrum as they look to build out 5G networks.

The merger could ultimately be a boon for DISH, which has been buying up wireless spectrum licenses. As such, it is being considered a potential acquisition target, with Verizon Communications Inc. being the most likely bidder.

Mentioned in this article:

Cobalt International Energy Inc. NYSE: CIE

DISH Network Corp. Nasdaq: DISH

Tesla Inc. Nasdaq: TSLA

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