Midday Commentary: Tesla drops after Model S car fire; Campus Crest, Unite emerge in primary

By Rebecca Melvin

New York, Oct. 3 - Convertibles were under pressure early Thursday amid lower shares as investors eyed day three of the U.S. government's partial shutdown.

Tesla Motors Inc.'s convertibles continued to drop in the early going as shares of the Palo Alto, Calif.-based electric car maker traded down on news that one of its Model S cars caught fire after a collision.

Tesla's 1.5% convertibles due 2018 traded down to 153.75 and 154.75, which was down from as high as 170 early Tuesday, according to Trace data. Shares were down 4.8% at $172.22.

The primary market was stirred from its slumber by a small, $75 million deal from Campus Crest Communities Inc. The Charlotte, N.C.-based student housing company's deal was talked at a 4.25% to 4.75% coupon and 22.5% to 27.5% initial conversion premium and was seen pricing after the market close. It represents the first new U.S. paper in a week.

In the United Kingdom., a second student housing company, Unite Group plc, launched and priced £89.9 million of five-year convertible bonds to yield 2.5% with an initial conversion premium of 35%. That represented pricing on the rich end of talk for the Regulation S deal.

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