Most SunEdison tranches unchanged after disappointing loss; Tesla Bs expand on stock drop

By Rebecca Melvin

New York, Aug. 6 – Quarterly earnings reports continued to drive activity in U.S. convertibles on Thursday.

SunEdison Inc.’s complex of convertible bonds slid on an outright basis in tandem with a large drop in the common shares of the company after it reported a disappointing quarterly loss. But four of the six SunEdison convertibles tranches were unchanged on swap, while the two oldest, smaller SunEdison issues improved on swap, a New York-based trader said.

Still, the 25% slide in the underlying shares for the St. Peters, Mo.-based solar technology company created some angst among convertibles traders. The fear could provoke more selling, the trader said when asked if the convertibles could outperform the equity if the slide continued through the session.

Tesla Motors Inc.’s convertibles were also weighed down on an outright basis by the company’s wider but better-than-expected quarterly loss, which dragged down shares. But the longer-dated Tesla convertible B tranche expanded about 0.5 point on a swap basis.

Looking ahead, Tesla also trimmed its 2015 delivery outlook and warned that margins could be thinner than expected. Shares ended down 9%.

Echo Global Logistics Inc.’s 2.5% convertibles, which priced in April, slid on an outright basis after the Chicago-based provider of technology-enabled logistics services reported second-quarter revenue that missed estimates. Echo shares fell nearly 20%.

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