Qwest Analysis – 11/5/05 Summary The 5 year CDS for the convertible issue was quoted at 325/350. I believe that the spread could tighten by 50bps to 275/300 within the next 12 months. Qwest generates strong and steady cash flows of about $1.1B per year and management is committed to continue to reduce debt and […]
Sybase (102.557 vs. $21.79) Summary I would use 200 over L as the credit spread for the convert, which has a 5 year put. The credit risk is low because SY’s software maintenance fees produce a sizable annuity-like cash flow. The primary risk is that management makes big acquisitions with that cash, which is why […]
FEIC Analysis 8/29/05 Summary The FEIC 5.5% converts due 8/15/08. trade at 100.375. The main risk for this position is FEIC’s credit risk. I reviewed the company’s business and financials and have concluded that the credit is solid. Positives for the credit are 1) the company has $276M in cash and $220M in debt. 2) FEIC is […]
RGA Analysis 8/12/2005 Summary The following is an analysis of the risks for the RGA 5.75% PIERS position. The biggest risk is credit risk, which I feel is minimal due to the nature of RGA’s business, conservative management and current financial strength (A- rating). A second risk is if RGA stock goes above $48, thus […]
MRX Analysis – May 18, 2005 Summary There are currently a lot of moving parts for MRX. The company is not rated by S&P or Moodys but I estimate MRX to be a B- type credit with a 350 over Libor spread based on the following: 1) MRX has $561M in cash and $453M in […]
CDIS analysis – May 16, 2005 Summary I estimate a 300 over Libor spread for CDIS based on strong credit metrics but offset by their small size and exposure to a capital intensive and cyclical industry. The company is not rated by S&P or Moodys. I would rate CDIS a B+ credit. The recent price […]
PRA analysis – May 13, 2005 Summary I estimate a 200 over Libor spread for PRA. The convert market implies a spread close to 700 over Libor using 107.5 v 39.46 and 20 vol. The market must be concerned about a cash takeover. Fitch has a BBB- rating for the company. 1) PRA is a […]
IVGN Analysis – May 11, 2005 I think the 2.25% converts are a good buy because I believe the credit is solid and the stock could go to $100 in the next 12 months if the company can execute. 1) IVGN is very diversified with thousands of customers. The company is leverage to an increase […]
CEPH Analysis – May 10, 2005 Summary I would use 300 credit spread over Libor for CEPH. The credit metrics of the company suggest a tighter spread but CEPH faces some challenges in 2006-2007 that require a higher spread to compensate for the added risk. Overall, I believe the credit is good with the positives […]
Novell Credit Analysis – May 5, 2005 Using 82 vs. $5.79 and 30 vol. I get implied credit of about 250 over Libor using the Bloomberg model. These converts are senior unsecured. NOVL is a good convert arbitrage candidate because the credit is safe and the equity is valued like an option. I think the […]