Convertible bond trading limited; Tesla paper rises on shipments; Acorda patents nixed

By Stephanie N. Rotondo

Seattle, April 3 – The first trading session of the second quarter was a quiet one for convertible bonds, a trader said.

A majority of Monday’s volume was taken up by Tesla Inc., the trader said.

For its part, Tesla was active – and better – after the Palo Alto, Calif.-based car manufacturer said it had shipped over 25,000 vehicles in the first quarter of 2017.

That was better than the shipments of 24,200 that analysts had forecast.

Meanwhile, Acorda Therapeutics Inc.’s convertible bonds were losing ground after the U.S. District Court for the District of Delaware invalidated four patents related to Ampyra, a drug treatment for multiple sclerosis.

Among convertible preferred stocks, FelCor Lodging Trust Inc.’s series A cumulative convertible preferreds (NYSE: FCHPrA) were better, though on no fresh news.

The convertible preferreds were up 28 cents, or 1.15%, at $24.66.

In the broader preferred space, TICC Capital Corp. said it was selling $50 million of $25-par notes due 2024, the proceeds of which will be used to repay or repurchase some of the company’s $94.5 million of 7.5% convertible notes coming due Nov. 1.

The 7.5% convertibles have been trading around par.

Tesla expands

Tesla’s convertibles were doing well, as was the stock, as the company said it had shipped more vehicles than expected in the first quarter.

Furthermore, the number of deliveries puts Tesla over halfway toward its goal of shipping 50,000 cars in the first six months of the year.

The 2.375% convertibles notes due 2022 were seen expanding 3.5 points outright, trading in a 107.5 to 108 context.

“The stock is up $13.00, so that would explain that [gain],” a trader said at mid-morning. Equal to an equity gain of nearly 5%, he said the bonds were “tracking properly.”

As for the 0.25% convertible notes due 2019, they were “just shy” of 102, the trader reported.

He noted that parity on that issue was around 81.

At another desk, the 1.25% convertible notes due 2021 were pegged near 102, up just over 4 points. The 0.25% convertibles were deemed up a similar amount around 104.

And, the 2.375% convertibles added almost 4.5 points, trading at 108.5.

The company’s shares closed up $20.22, or 7.27%, to $298.52.

Of the vehicles delivered, 13,450 were Model S sedans and 11,550 were Model X sport utility vehicles. Total production during the quarter was 25,418 vehicles.

Tesla’s report came on the heels of the monthly U.S. auto sales report, which showed a 1.6% decline for the month.

The dip was the third seen in as many months.

By category, car sales declined 11%, as truck and SUV sales improved by 5.2%.

Acorda trades off

Acorda Therapeutics’ 1.75% convertible notes due 2021 were trading in a wide range of 80.625 to 83.25 on Monday, after it was reported that four of the company’s patents on its Ampyra drug were invalidated.

That equated to a loss of a couple of points, according to a market source.

The stock didn’t fare so well either, falling $2.60, or 12.38%, to $18.40.

Ampyra is a key product of Acorda. The drug is said to improve walking for MS patients.

However, with the court’s ruling – it did uphold one patent for the extended-release version – it paves the way for makers of generic versions of the drug to steal market share.

Acorda did say in November that it was discontinuing development of Ampyra for an expanded indication of post-stroke walking difficulties.

Mentioned in this article:

Acorda Therapeutics Inc. Nasdaq: ACOR

FelCor Lodging Trust Inc. NYSE: FCH

Tesla Inc. Nasdaq: TSLA

TICC Capital Corp. Nasdaq: TICC

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