Convertibles mostly recover with shares; new Intercept convertible gains in active trade

By Rebecca Melvin

New York, June 30 – Trading of Intercept Pharmaceuticals Inc.’s new 3.25% bond dominated the convertibles space on the last session on the month on Thursday, expanding a good 3 points on a dollar-neutral, or hedged, basis and accounting for about 30% of the day’s trading volume, a New York-based trader said.

The new Intercept Pharmaceuticals bonds were quoted at 102.75 bid, 103.5 offered on a swap basis, against shares at $142.68, the trader said at the end of the session.

The stock recovered some ground, ending the day down 4.8% compared to a 7.2% decline in the early going.

Back in established issues, Tesla Motors Inc.’s convertibles were weaker. The Tesla 1.5% convertibles, which are the most affected by tight borrow given their heavier delta, were suffering the most. The Tesla 1.25% convertibles due 2021 traded a bit, according to Trace data. And that paper was down 0.5 point on an outright basis to 82.337.

Tesla shares had traded down initially on Thursday but were last positive by $2.22, or 1%, at $212.41 at the end of the session.

SolarCity Corp.’s 2019 bonds recovered some ground on Thursday, ending the session at 71 compared to 66 on Wednesday, when they had dropped 5.5 points, according to Trace data. But the SolarCity convertibles are still trading lower than they had been compared to the initial pop on news that Tesla Motors is attempting to buy the company.

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