Tesla convertible notes come in as new model prepped for public; SunEdison weak; iStar up

By Stephanie N. Rotondo

Seattle, March 23 – Tesla Motors Inc.’s convertible bonds were sliding with the stock in Wednesday trading.

The weakness came as S&P Global Market Intelligence downgraded the stock to “sell,” citing the fact that the equity is trading well-above price targets.

The 1.25% convertible notes due 2021 finished around 84.5, according to a market source. That was down from previous levels around 86.25.

As for the stock, it declined $11.66, or 4.98%, to $222.58.

S&P said its current price target on the car manufacturer’s stock was $155.00. But the equity has recently been on a tear as the market prepared for Wednesday’s unveiling of the new Model 3, a $35,000 sedan aimed at attracting the average consumer.

Tax incentives in some states could even lower that price to $30,000.

If the new model proves to be successful, however, it could boost Tesla’s bottom line, which has struggled amid poor growth and weak profit margins.

Customers can preorder the new model in-store on March 31 or on Tesla’s website on April 1.

Tesla is based in Palo Alto, Calif.

SunEdison fizzles

The market continued to pressure SunEdison Inc.’s convertible debt on Wednesday as expectations of a bankruptcy filing intensified.

A source saw the 3.375% convertible notes due 2025 falling to a 3.5 to 3.625 context. That compared to a range of 4 to 4.125 on Tuesday.

The stock meantime dropped 22 cents, or 14.77%, to $1.27.

On Tuesday, it was reported that the struggling solar company was in talks with holders of its second-lien loans to fund a debtor-in-possession facility.

SunEdison is reportedly looking for a $300 million DIP. Its efforts to secure such a facility indicate that attempts to restructure its nearly $2.4 billion in debt out of court may have failed.

Last week, the company also delayed filing its latest quarterly report, for the second time. The company attributed the most recent delay to issues associated with its new IT system.

SunEdison is based in St. Peters, Mo.

iStar firms

iStar Financial Inc.’s 1.5% convertible notes coming due Nov. 15 were inching higher as the company tapped the market with a $250 million high-yield bond issue.

The deal later came upsized at $275 million, priced at par to yield 6.5%.

A market source deemed the convertibles up a point at 98 bid, 98.25 offered.

The equity, however, dipped 48 cents, or 5.19%, to $8.77.

The five-year notes were being talked with a 6.75% yield.

Proceeds from the offering will be used to take out the 3.875% notes maturing on July 1.

Those bonds were trading around par, the source said.

J.P. Morgan Securities LLC, BofA Merrill Lynch, Barclays and Wells Fargo Securities LLC are the deal’s joint bookrunners.

iStar is a New York-based real estate investment trust.

Mentioned in this article:

iStar Financial Inc. NYSE: STAR

SunEdison Inc. NYSE: SUNE

Tesla Motors Inc. Nasdaq: TSLA

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