Morning Commentary: Convertibles quiet heading into holiday weekend; Teslas improve on strong data

By Rebecca Melvin

New York, July 2 – U.S. convertibles players assessed aspects of the financial environment early Thursday and traded lightly ahead of the long holiday weekend in observance of July 4.

About the only thing of note in the space was action in Tesla Motors Inc., which saw improvement in its trio of convertible bonds on a swap basis after the company reported better car deliveries and shares jumped 4%, a New York-based trader said.

Tesla’s 1.25% convertibles due 2021, or the B tranche, traded up to near par at 99.875 and was called 0.25 point better on a dollar-neutral basis.

Tesla’s 0.25% convertibles due 2019 printed above par at 100.5 when shares were around $275.50, which was up 2.6%. The bonds have been lagging below par for some time.

The Tesla 1.5% convertibles due 2018, which are the older, shorter-dated bonds, were also better and printed at 224.61, which was up about 10 points outright, according to Trace data.

Tesla announced that it delivered 11,507 Model S vehicles for its second quarter, which was up about 52% from the year-earlier period.

Elsewhere, Peabody Energy Corp. was trading again and seen in trade at 13 and 14.75. On Wednesday, the 4.75% convertibles were quoted at 14.75 bid, 15 offered.

Economic data on Thursday was mostly benign. Investors anticipate a positive outcome in the Greece debt situation, and jobs data in the U.S. monthly jobs report for June was mostly in line with expectations, a trader said.

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