Morning Commentary: Convertibles steady despite slip in stocks; Gilead active ahead of maturity

By Rebecca Melvin

New York, April 5 – U.S. convertibles were little changed in the early going on Tuesday as stocks remained in a bit of a pullback mode from year-to-date highs notched last week.

“Things are pretty firm, and until there is a change in risk pricing or there are more offerings, things continue to be pretty firm, pretty good in convertibles,” a New York-based trader said.

Gilead Sciences Inc.’s 1.625% convertibles, which mature May 1, were trading actively and last seen at 428, or less than a point under parity, as outright buyers took advantage of the strength in the underlying shares to be involved there.

“It is day three of the averaging period and the bonds are going away, with April 27 the end of the conversion period,” a trader said.

Gilead shares traded up $2.13, or 2.3%, at $96.37.

Elsewhere, Tesla Motors Inc.’s convertibles remained firm on the back of news regarding initial orders for the Palo Alto, Calif.-based electric car maker’s new Model 3 electric sedan going into production next year.

The Teslas have been pretty firm on the stock move and the improved fundamentals for the company, a trader said.

Tesla’s 0.25% convertibles due 2019 traded last at 93.45, which was off a little, but in line with the underlying shares, compared to Monday. Tesla’s 1.25% convertibles due 2021 traded last at 90.

Tesla’s 1.5% convertibles due 2018 were not trading as well. “That bond is under parity and the stock borrow is difficult,” a trader said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.