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Morning Commentary: Tesla stock surges, convertibles less active; Insmed drops outright
By Abigail W. Adams
Portland, Me., Oct. 1 – The convertibles space opened Monday with light trading volume, despite some large movements in stock prices.
There was $52 million on the tape a little more than an hour after the opening bell with few names seeing concentrated trading activity.
Tesla Inc.’s 2.375% convertible notes due 2022 were the only one of the company’s tranches to trade on Monday as its stock surged after news broke over the weekend that CEO Elon Musk and the Securities and Exchange Commission had settled the SEC’s lawsuit.
The 2.375% notes jumped about 10 points outright to trade at 112.5, a market source said. Tesla stock was up over 16% to $309.49. About $4 million of the bonds had traded.
Tesla’s three tranches of convertible notes and SolarCity Corp.’s bonds occupied the focus of the convertibles secondary space on Friday as stock tanked after news broke the SEC was seeking to bar Musk from serving as a director or executive of a publicly traded company.
Musk will continue to service as CEO; however, the settlement removes him from the position of chairman of the board, which Tesla agreed to appoint two independent directors to.
Insmed Inc.’s 1.75% convertible notes due 2025 dropped more than 11 points outright as its stock cratered early Monday.
The 1.75% notes dropped to 78.825 early in the session. Insmed stock was down almost 15% to $17.20.
The Food and Drug Administration approved Insmed’s new drug ALIS to treat a rare lung disease after the market close on Friday.
While approved, the drug’s label will contain a black-box warning about increased risk of respiratory conditions and will restrict its use to treatment-resistance patients, Reuters reported.
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