Convertibles steady despite slip in stocks; Gilead active ahead of maturity; Tesla firmer

By Rebecca Melvin

New York, April 5 – U.S. convertibles were little changed on Tuesday as stocks remained in pullback mode from year-to-date highs notched last week.

“Things are pretty firm, and until there is a change in risk pricing or there are more offerings, things continue to be pretty firm, pretty good in convertibles,” a New York-based trader said.

Gilead Sciences Inc.’s 1.625% convertibles, which mature May 1, 2016, were trading actively and last seen at 427, or less than a point under parity, as outright buyers took advantage of the strength in the underlying shares to be involved there, the trader said.

“It is day three of the averaging period and the bonds are going away, with April 27 the end of the conversion period,” he said.

Gilead shares traded higher by as much as 2.6% in the early going but ended higher by only 1.4% at $95.57.

Red Hat Inc., which is one of the convertible market’s more liquid convertible names, traded down on an outright basis but was flat, or in line, on a swap basis.

Elsewhere, Tesla Motors Inc.’s convertibles remained firm on the back of news regarding initial orders for the Palo Alto, Calif.-based electric car maker’s new Model 3 electric sedan, which is going into production next year.

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