Tesla’s new convertible notes come in; Microchip active; Insmed trades down outright

By Abigail W. Adams

Portland, Me., May 7 – Trading volume in the convertibles secondary space remained light on Tuesday as an escalation in trade tensions between the United States and China continued to drive equities lower, sources said.

Most players were on the sidelines on Tuesday attempting to get a feel for the market and trying to determine whether the downturn was temporary or would have a staying effect.

The S&P 500 index closed the day down 1.65%, the Nasdaq ended down 1.96% and the Russell 2000 closed the day down 2.02%.

If the downward spiral continues, some names would begin to come in with bids starting to get hit, a market source said.

However, the convertibles market, for the moment, was steady in a wait and see mode, sources said.

While the overall space remained quiet, Tesla Inc.’s newly priced 2% convertible notes due 2024 continued to see active trading with the notes again moving lower from their highs after hitting the secondary space on May 3.

Microchip Technology Inc.’s 1.625% convertible notes due 2025 were also major volume movers during Tuesday’s session with the notes trading down alongside stock.

While volume was light, Insmed Inc.’s 1.75% convertible bonds due 2025 were also trading down as stock tanked following the company’s first-quarter earnings report.

Tesla comes in

Tesla’s 2% convertible notes due 2024 continued to move lower in active trading on Tuesday, despite the general quiet that was pervading the market.

The 2% convertible notes dipped to a 103 handle in early trading on Tuesday, according to a market source.

They dropped as low as 101.75 by the mid-afternoon.

The 2% notes were contracted another 0.25 point dollar-neutral, a market source said.

After expanding more than 1.5 points dollar-neutral on their market debut, the 2% notes were also losing ground during Monday’s session with a 0.25 point contraction.

Tesla’s B and C tranches also remained active on Tuesday.

The 1.25% convertible notes due 2021 were changing hands around 100.5 early in the session.

They dropped below par into the afternoon and were changing hands at 99.625, according to Trace data.

The 2.375% convertible notes due 2022 were changing hands around 104.625 early in the session and dropped to just south of 104 by the late afternoon.

Tesla stock traded to a high of $257.21 and a low of $245.10 before closing the day at $247.22, a decrease of 3.18%.

Microchip active

Microchip’s 1.625% convertible notes due 2025 were also active during Tuesday’s session with the notes coming in alongside stock.

The 1.625% convertible notes dropped about 5 points outright to trade at 188.25 in the mid-afternoon.

Microchip stock traded as low as $92.70 before closing Tuesday at $94.17, a decrease of 2.9%.

The notes were active ahead of Microchip’s fourth-quarter earnings report, which is expected Wednesday prior to the market open.

Insmed’s earnings

Insmed’s 1.75% convertible notes due 2025 were trading down on an outright basis as stock tanked following the company’s first-quarter earnings report.

The 1.75% notes dropped about 5 points outright to 100.625 by the late afternoon and closed the day around 100.25, sources said.

Insmed stock closed Tuesday at $28.26, a decrease of 12.21%.

While Insmed stock traded down alongside the broader market, its earnings report was largely in line with expectations.

Insmed reported a loss per share of 94 cents for the first quarter on revenue of $21.9 million.

Mentioned in this article:

Insmed Inc. Nasdaq: INSM

Microchip Technology Inc. Nasdaq: MCHP

Tesla Inc. Nasdaq: TSLA

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