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Morning Commentary: Tesla, InterDigital little changed as market preps for earnings; Iconix steady
By Stephanie N. Rotondo
Seattle, April 25 – A convertible bond trader said there was “a little bit more activity” in the space on Tuesday.
“I assume it is guys trying to get out of stuff,” he added. With stocks tearing higher, that has resulted in “low volatility and slow accretion” for convertible debt.
“It hurts valuations,” he said.
And in fact, there wasn’t a lot of price movement among convertible issues, the trader pointed out.
Tesla Inc., for instance, was on the active side but about unchanged as investors prepare for the company’s earnings release next week.
The 2.375% convertible notes due 2022 were holding in a 110.25 to 110.75 context, according to a market source. The 1.25% convertible notes due 2021 were around 102.375.
The company’s stock (Nasdaq: TSLA) was up a touch in early dealings.
A trader said he saw InterDigital Inc.’s 1.5% convertible notes due 2020 moving around a bit.
“I haven’t seen them trade in forever,” he remarked, placing the paper in a 135 to 135.25 range.
That was up about 6 points outright.
Like Tesla, the stock (Nasdaq: IDCC) was only slightly better at mid-morning.
The Wilmington, Del.-based mobile technology research and development company is slated to announce earnings prior to Thursday’s open.
And, Iconix Brand Group Inc.’s 1.5% convertible notes due 2018 were little moved in early trading, with a trader placing the paper at 95.875.
At that level, he noted, the issue trades with a 6.4% yield.
“That’s nice for less than one year paper,” he said.
Iconix’s shares (Nasdaq: ICON) were moderately better, though there was no fresh news to help the equity improve.
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