Convertible bonds sink after Brexit vote; Tesla stays under pressure; Red Hat loses ground

By Stephanie N. Rotondo

Seattle, June 24 – The convertible bond market was following in line with the broader markets on Friday – that is, it was trading off on news the United Kingdom had voted to leave the European Union.

Still, the carnage was not untenable, at least according to one trader.

“There’s really no panic,” he said. He speculated that once European markets closed for the week, the U.S. markets “could totally reverse.” He also noted that in the European markets, the pain was being felt more outside of the U.K. than inside.

And while U.S. markets did manage to pare some of their losses, the rebound was short lived. The Dow Jones industrial average, for instance, opened the day off over 500 points, but soon recovered a bit to being off only 300-and some points. By the end of the day, the Dow had dropped about 611 points.

As for the day’s dealings, Tesla Motors Inc.’s 0.25% convertible notes due 2019 continued to “follow the stock down,” a trader said.

He placed the bonds at 87.25. For its part, the equity was off $3.25, or 1.65%, at $193.15.

Meanwhile, Red Hat Inc.’s 0.25% convertible notes due 2019 were trading actively on Friday in an otherwise muted trading session.

A trader placed the issue at 123.25 versus a stock price of $75.25.

The company’s common shares ended off $4.77, or 6.08%, at $73.62.

© 2015 Prospect News.
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