Morning Commentary: Improved earnings from Tesla, ServiceNow boost convertibles; NXP active

By Stephanie N. Rotondo

Seattle, Oct. 27 – Earnings news continued to be a key driver of convertible bonds on Thursday.

Tesla Motors Inc., for instance, saw its 1.25% convertible notes due 2021 trading actively following the company’s quarterly results released late Wednesday. The results showed a surprise profit – the first in over three years – and Elon Musk, chief executive officer, indicated that no new capital would be needed for the production of the new Model 3 sedan.

The convertibles traded up nearly 2 points outright in early trading, straddling 90. The equity (Nasdaq: TSLA) was also decently better, rising $9.60, or 4.25%, to $210.84.

ServiceNow Inc.’s 0% convertible senior notes due 2018 were also trending higher in the wake of results that beat expectations.

The paper was seen at 131.375 at mid-morning, an outright gain of about 6 points.

The stock (NYSE: NOW) was up sizably at $88.42, up over 12%.

Away from earnings news, NXP Semiconductors NV’s 1% convertible notes due 2019 were slightly softer on the heels of news that the chip maker was being acquired by Qualcomm Inc.

The convertibles were pegged at $114.875 versus a share price of $100.31. For its part, the equity (Nasdaq: NXPI) was up over 1% in early trading.

Late Wednesday, Helix Energy Solutions Group Inc. priced $125 million of 4.25% convertible senior notes due 2022, up 42.5%. The company said it plans to use those proceeds to privately repurchase and retire all $125 million of the 3.25% convertible senior notes due 2032.

The 3.25% convertibles were active on Thursday, trading at par.

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