Tech names slip with equities amid Columbus Day lull; Illumina active; Tesla notes lower

By Rebecca Melvin

New York, Oct. 8 – Technology-sector convertibles traded lower on an outright basis in tandem with selling in the underlying shares on Monday, as things got off to a generally quiet start with the bond markets closed in observance of the Columbus Day holiday.

One trader said most departments in his firm were emptied by the holiday. But there was significant trading in genome-sequencing company Illumina Inc.’s 2019 convertible bonds. Those bonds fell nearly 3 points on an outright basis to 129 as shares slipped again.

But the newer Illumina 2023 convertible bonds continued to hold in better and were seen at 105.1. Shares of the San Francisco-based company’s stock closed down $3.63, or 1.1%, to $325.89.

The Illumina shares have turned lower since Oct. 1, dropping 4.41% on Friday and 4% on Thursday. They hit a 52-week high on Aug. 31.

Tesla heads lower

Tesla Inc. remained a focus, with the Tesla 1.25% notes due 2021 taking another leg lower as shares fell another $1.39, or 4.3%, to $250.56 on Monday.

The Tesla 2021 bonds traded with a 93 handle and were seen 93.9 late in the session, which was down 2.5 points on the day. Since Oct. 1, Tesla shares have dropped 19%, and since chief executive Elon Musk’s Aug. 7 tweet about taking the company private, shares have plunged 35%.

Musk settled a suit with the Securities and Exchange Commission over the tweets at the end of September, agreeing to step down as Tesla chairman for three years and paying a $20 million fine matched by a fine for Tesla. Meanwhile, the company has said that the Department of Justice requested documents in a probe of Musk and the Palo Alto, Calif.-based electric carmaker.

The Tesla 1.25% notes due 2021 were quoted at 96 bid, 96.5 offered early Monday when shares were bouncing around.

Tilray extends weakness

Tilray Inc.’s $450 million convertible note, which debuted in the market on Friday, was another notable decliner, albeit on lighter volume.

The Tilray 5% convertible due 2023 changed hands at 96.5, which was down 2.5 points on an outright basis. That fall was on top of a move lower on Friday to 98 with shares lower by 3% at mid-afternoon on Friday, although the stock posted a positive close, up 0.92% on the day.

Square moves lower

Square Inc. was another decliner. The San Francisco-based financial services merchant services aggregator and mobile payment company saw its convertibles fall 7.25 points to 130.55, according to Trace data. Square shares fell $8.08, or 8.6%, to $86.06.

The 10-year U.S. Treasury yield rose to 3.227% last week, its highest level since 2011. The market was closed Monday for a holiday.

Stock in European markets fell on Monday as worries about Italy’s fiscal budget hit government bonds, causing yields to rise to a multi-year high. Meanwhile Chinese stocks fell sharply as market players returned from a weeklong holiday for the Asian country. The benchmark Shanghai Composite index lost 3.7%.

Looking ahead, market players are eying the start of third-quarter earnings season with big U.S. banks beginning to report later in the week.

Mentioned in this article:

Illumina Inc. Nasdaq: ILMN

Tesla Inc. Nasdaq: TSLA

Tilray Inc. Nasdaq: TLRY

Square Inc. NYSE: SQ

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