Tesla in focus, contracts; Weatherford trades down on bankruptcy; Western Digital lower

By Abigail W. Adams

Portland, Me., May 13 – The week opened to a brutal session on Monday as equities went into freefall as China hit back on the United States’ increased tariffs by increasing tariffs.

The Nasdaq composite index closed the day down 3.41%, the S&P 500 down 2.41% and the Russell 2000 down 3.18%.

Trading volume in the secondary space was relatively light with $66 million on the tape shortly before 11 a.m. ET and $355 million in reported volume shortly before the market close.

While domestic accounts were largely on the sidelines, European accounts were active, a market source said.

Tesla Inc.’s newly priced 2% convertible notes due 2024 were in focus during Monday’s session with the notes continuing their downward spiral. Tesla’s other tranches were also contracted.

Weatherford International Ltd.’s 5.875% convertible notes due 2021 were also active on news the company had reached a restructuring agreement with a majority of its unsecured noteholders and would be filing for Chapter 11 bankruptcy.

Western Digital Corp.’s 1.5% convertible notes due 2024 were also coming in with the stock hard hit from the escalation in the trade wars.

While the overall market was soft on Monday, Intercept Pharmaceuticals Inc.’s 2% convertible notes due 2026 continued to improve with a slight dollar-neutral expansion.

Tesla contracts

Tesla’s 2% convertible notes due 2024 were the most actively traded issue during Monday’s session with the notes continuing their downward spiral.

The 2% convertible notes hit their lowest outright price since hitting the secondary space. They were down about 4 points outright to trade at 96.75 bid, 97.25 offered.

The notes were contracted another 0.25 point dollar-neutral, a market source said.

More than $22 million of the bonds were on the tape by the late afternoon.

The 2% notes were hovering at par at the market’s close last Friday.

After a large dollar-neutral expansion on their market debut on May 3, the notes steadily came in throughout last week.

Tesla’s B and C tranches were also down about 0.25 point dollar-neutral, a market source said.

The 1.25% convertible notes due 2021 were also seen at 96.75 bid, 97.25 offered.

The 2.375% convertible notes due 2022 were quoted at 98.5 bid, 99 offered.

Tesla stock traded to a high of $232.47 and a low of $224.50 before closing the day at $226.87, a decrease of 5.28%.

Outside of the constant swirl of headlines surrounding Tesla, the auto sector was particularly hard hit by the escalation in trade war tensions and imposition of new tariffs, a source said.

Weatherford’s bankruptcy

Weatherford’s 5.875% convertible notes due 2021 also saw high-volume trading activity with the notes down double digits after the oil and natural gas company announced after the market close on Friday that it was filing for Chapter 11 bankruptcy.

The 5.875% notes were down about 10 points. They were trading in a range of 59 to 61, a market source said.

More than $15.5 million of the bonds were on the tape by the late afternoon.

With the terms of the bankruptcy established, holders were now attempting to determine what the value of the notes were.

Holders of Weatherford’s unsecured debt will get mostly new equity and a small amount of a straight bond, a source said.

Weatherford announced in its quarterly report on Friday that it would file for Chapter 11 bankruptcy.

The company also announced a restructuring support agreement it had reached with the majority of holders of its unsecured debt.

Western Digital contracts

Western Digital’s 1.5% convertible notes due 2024 were down on both an outright and dollar-neutral basis with the company’s stock hard hit by increased trade war tensions.

The 1.5% convertible notes dropped about 1.25 points outright. They were seen changing hands at 87 versus a stock price of $42.96.

The notes were contracted about 0.5 point dollar-neutral, a market source said.

More than $13 million of the bonds were on the tape by the late afternoon.

Western Digital stock closed Monday at $43.00, a decrease of 6.24%.

Intercept improves

While volume was light, Intercept’s newly priced 2% convertible notes due 2026 were holding up well as markets cratered.

While down outright, the notes continued to expand dollar-neutral. The 2% convertible notes dropped about 2 points outright to 102.375 in the late afternoon.

However, they were expanded 0.125 point dollar-neutral.

Intercept stock closed Monday at $83.68, a decrease of 3.44%.

The notes traded as high as 104.5 and expanded 2 points dollar-neutral on their market debut last Friday.

Mentioned in this article:

Intercept Pharmaceuticals Inc. Nasdaq: ICPT

Tesla Inc. Nasdaq: TSLA

Weatherford International Ltd. NYSE: WFT

Western Digital Corp. Nasdaq: WDC

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