Morning Commentary: Tesla stock, convertible bonds continue to gain; trading thin as Fed eyed

By Stephanie N. Rotondo

Seattle, June 14 – It continued to be the Tesla Inc. show in the convertible bond market early Wednesday.

The name started to climb up on Tuesday following an equity upgrade from Berenberg. The firm stated that the company could have “disruptive potential” on the automotive space, given its “near monopolistic” ability to gain market share and outperform rivals.

Come Wednesday, market commentator and portfolio manager Jim Cramer noted that Tesla’s equity was being modeled closer to tech stocks than to automotive stocks. In fact, Cramer likened the name to tech giants such as Amazon and Netflix.

And as Tesla’s shares added another 1% by mid-morning – the equity gained nearly 5% on Tuesday – the company’s convertible debt was following suit.

A market source called the 2.375% convertible notes due 2022 up about 1.5 points, trading with a 130 handle. The 0.25% convertible notes due 2019 were meantime about 1.25 points higher at 117.35.

And, the 1.25% convertible notes due 2021 firmed nearly 3 points in early dealings, trading close to 119.375.

Away from Tesla, liquidity was on the limited side, given that the market remained focused on the Federal Reserve policy meeting slated to end later in the day.

The expectation is that the central bank will opt to raise interest rates this month.

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