Morning Commentary: Convertibles secondary trading volume light; Tesla rally continues

By Abigail W. Adams

Portland, Me., Dec. 23 – The markets were strong but the volume was light on Monday as accounts continued their end-of-year wind down.

The convertibles secondary space saw $30 million in reported volume about one hour into Monday’s session. However, few names saw concentrated activity.

Tesla Inc.’s convertible notes remained in focus. However, even those notes, which were heavy volume movers throughout last week, only had a couple million in trades early in the session, a market source said.

The notes continued to gain on an outright basis as stock’s upward momentum continued.

However, the notes appeared to be moving in line on a dollar-neutral, or hedged, basis, a market source said.

Tesla’s 1.25% convertible notes due 2021, the shortest dated convertible notes, remained the most actively traded.

The 1.25% notes were changing hands at 127.125 early in the session with about $3 million in reported volume.

The 2.375% convertible notes due 2022 were changing hands at 141. The 2% convertible notes due 2024 traded up to 150.

Tesla stock was changing hands at $420.31, an increase of 3.63%, shortly before 11 a.m. ET.

The upward momentum of Tesla stock, which broke $400 last week, was given an extra boost on Monday following news that the electric car manufacturer had secured $1.4 billion in financing from Chinese banks to support its Shanghai factory.

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