Morning Commentary: Ship Finance new issue steady; Depomed busy on patent suit win; Tesla rises

By Stephanie N. Rotondo

Seattle, Oct. 3 – The convertible bond market was subdued early Monday, which one trader attributed to the Rosh Hashana holiday.

“There’s nobody in,” he said.

The primary was taking a breather after a jam-packed calendar the previous week. From last week, Ship Finance International Ltd.’s $225 million of 5.75% convertible senior notes due 2021 were seen holding in a 99.5 to 99.75 range.

The equity (NYSE: SFL) underlying the debt was meantime down 17 cents at $24.56.

The deal came Friday, upsized from $200 million and at the rich end of the 5.25% to 5.75% price talk. The conversion premium of 22.5% was in the middle of the expected 20% to 25% range.

Jefferies LLC, ABG Sundal Collier and Morgan Stanley & Co. LLC ran the books.

In the secondary, Depomed Inc.’s 2.5% convertible notes due 2021 were on the more active side – though even trading there was modest.

A trader pegged the convertibles at 143.29 versus a stock price $25.00.

On Friday, it was reported that the drugmaker had won a patent suit over its opioid drug Nucynta. The win could help the company seek a buyer.

Meanwhile, Tesla Motors Inc.’s 1.25% convertible notes due 2021 were improving with the stock, as the company issued a report on Sunday that showed auto shipments had beaten expectations.

The convertible bonds were trading at 87.375 at mid-morning, a gain of about 2 points from Friday. The stock (Nasdaq: TSLA) was up $10.07, or 4.25%, at $214.10.

In its statement, Tesla said it had shipped approximately 24,000 vehicles during the third quarter, putting the company well on its way to a second-half estimate of 50,000 vehicles delivered.

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