Macquarie stretches to 107; Tesla flat to better on higher shares; Exelixis stock surges

By Rebecca Melvin

New York, July 14 – U.S. convertibles traded quietly on Monday with a large chunk of volume in investment-grade issues including Macquarie Infrastructure Co. LLC’s 2.875% convertibles, which changed hands at 107 late in the session after having debuted in the market on Thursday.

Macquarie was one of the “best traders,” a New York-based trader said.

Citrix Systems Inc. was also in action in follow-on trade from Friday. Shares of the Fort Lauderdale, Fla.-based cloud computing company gained about 0.9%. There were about $52 million of those bonds that changed hands, and they are at 106, the trader said.

Elsewhere, Tesla Motors Inc.’s convertibles traded unchanged to better on a jump in the underlying shares following a Barron’s article that suggested that China may be a suitor of the Palo Alto, Calif.-based electric car maker given that the country is implementing new rules to raise the proportion of electric vehicles on its roads.

Also on Monday the convertibles of Mylan Inc. hit the Trace tape after the generic drugmaker said it would buy Abbott Laboratories’ specialty and branded generics business outside the United States for about $5.3 billion in stock.

Mylan’s 3.75% convertibles due 2015 changed hands at 397, according to Trace. Shares of the Canonsburg, Pa.-based generic drug maker were up about 2% at $51.50. The deep in-the-money Mylan convertibles were expected to trade up or down in line with shares.

Market players were likely involved in that name, “or put it on” for cash flows – the remaining coupons until maturity, a second trader said.

GT Advanced Technologies Inc.’s 3% convertibles due 2020 shed 7 points on an outright basis to 149.6, according to Trace data, as shares fell 5% after Asia’s CLSA investment bank cautioned that the company’s 2014 guidance may be at risk but maintained an outperform rating on shares and an $18.50 price target.

Exelixis Inc.’s 4.25% convertibles due 2019 traded a scanty amount and didn’t keep pace with a 23% surge in the underlying shares of the South San Francisco, Calif.-based biotechnology company on positive drug data.

Looking ahead, traders were geared up for the earnings news release of Yahoo! Inc., which was being looked to as a catalyst for beefed up trading in the overall technology sector.

Yahoo’s 0% convertibles due 2018 were seen last at 99.75 bid, 100.25 offered with the underlying shares at $35.60. The bonds trade on a 40% to 45% delta.

“Everyone is waiting for earnings and with the market up, and shaking off weakness late last week on the Portuguese bank issue, this may generate some vol.,” a trader said.

Macquarie trades up, in line

Macquarie’s new convertibles traded late on Monday at 107, with the underlying shares ending at $69.81. That compared to 106 bid, 106.75 offered at the end of Friday with the underlying shares at $68.70.

“They are absurdly rich, but on an absolute, outright basis they are doing better,” a trader said.

New York-based Macquarie owns, operates and invests in a diversified group of infrastructure businesses that provide basic services.

Tesla unchanged to better

Tesla’s 0.25% convertibles due 2019, or the A tranche, traded at 95.345 last on Monday, which was up about a point from Friday’s close on an outright basis but about 0.125 point better on a hedged basis, a trader said.

Tesla’s 1.25% convertibles due 2021, or the B tranche, changed hands between 94.5 and 94.9, which was up about 1.5 points on the day, according to Trace data. That was “in line with where they were Friday,” the trader said.

Tesla shares gained $8.57, or nearly 4%, to $226.70.

“Tesla stock saw a little interesting vol. following a Barron’s article that suggested China may be a suitor for the company,” the trader said.

China has unveiled new rules that require at least 30% of government auto purchases to be electric vehicles.

Exelixis pauses

Exelixis’ 4.25% convertibles due 2019 didn’t trade actively, but there was a print at 88 with the underlying shares at $3.60 and an early bid at 85.5 versus a share price of $3.50, market sources said.

Traders thought that given the share surge, the bonds should be in the mid 90s.

Exelixis shares ran up 76.5 cents, or 23%, to $4.09 on Monday.

Exelixis and Roche-Genentech announced positive data on the combination of clbimetinib and vemurafenib for the treatment of specific mutant melanoma tumors. These data were positive although details were lacking.

Mentioned in this article:

Citrix Systems Inc. Nasdaq: CTXS

Exelixis Inc. Nasdaq: EXEL

GT Advanced Technologies Inc. Nasdaq: GTAT

Macquarie Infrastructure Co. LLC NYSE: MIC

Mylan Inc. NYSE: MYL

Tesla Motors Inc. Nasdaq: TSLA

Yahoo! Inc. Nasdaq: YHOO

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