Tesla, SolarCity convertibles in retreat as doubts about merger deal increase; Whiting up

By Stephanie N. Rotondo

Seattle, June 23 – Tesla Motors Inc. and SolarCity Corp. were trading actively in the convertible bond market on Thursday, as there was “considerable doubt this thing gets done,” a trader said.

The trader was referring to Tesla’s offer to buy SolarCity – both companies are helmed by Elon Musk – in a stock deal valued at $2.5 billion.

“Everybody hates the deal except Elon Musk,” a trader said.

That is because for its part, Tesla itself has been struggling to ramp up production of its Model 3 so it can be mass-marketed at the end of next year.

With concerns about the deal increasing, SolarCity’s convertible debt was retreating from the previous day’s highs.

Toward the close, the 1.625% convertible notes due 2019 were deemed down 1.5 points at 67.875. Earlier in the session, a trader said the 1.625% convertible notes due 2019 were off 2.5 points at 67.5 bid, 67.75 offered.

That issue had added about 15 points in midweek trading.

Tesla’s 1.25% notes waned nearly 3 points to 87.75, according to a market source. The 0.25% notes slipped just a touch to straddle 89.

Meanwhile, Whiting Petroleum Corp.’s 1.25% convertible notes due 2020 got a boost Thursday as the Denver-based oil and gas company said it had completed a $1.06 billion exchange of notes for mandatory convertible notes.

The paper popped 5 points to 83.5, a market source reported.

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