Topic Archives: Convert New Issue Analysis

Convertible bonds new issues usually drive-by deals whereas most new high yield and loan issues go through a 1-2 week road show. This is becuase a large part of a convertible bond’s valuation is equity and requires less credit/indenture analysis. Most convertible bonds do not have financial covenants. Once a deal is announced, investors have a short amount of time (usually 1 day or less) to perform a quick and dirty analysis on the deal. Daiwa does a good job of this type of analysis and I have documented most of it here. Exceptions are clearly stated.

Dealer Trak (TRAK) new issue 2/28/12

2/28/12 Daiwa Color: Dealer Trak (TRAK) $150m (+22.5m) 144a senior cb pricing tonight from BARC/WFC/JPM. Terms: 5yr bullet, 1.5-2% up 30-35%, prots. DealerTrack provides software to the retail automotive industry. Numbers have been improving with improving auto sales and availability of credit. This cb will be only debt (full $125m secured rev available at L+225). […]

Lennar (LEN) new issue 11/22/11

$300m (+45m) sen unsec cb coming tonight from JPM/CITI Terms: 10yr, 5yr put/call, full pctns. UOP=debt repurchase/gcp. 2 existing CBs; 2% (01/12/13), 2.75% (20/12/15). Latter = 2.6% +34% x/par +41% 5yr CDS = 425/450. We’ll use L+400 for 4 yr 2.75% = 26 iv. 01/14 25c indicated 46iv bid, 2 yr 50/10%ile = 42/29%. We’ll […]

Air Lease (AL) 11/15/11

$300m (+45m) 144a senior unsec cb tonight from JPM/NOM/BARC/C. Terms: 7yr bullet, 2.875%-3.375% up 33.5-38.5, prot. UOP = acq of commercial aircraft & gcp. Aircraft leasing company, launched in 2010 and IPO’d April 2011. 7.5 levered w/,ore debt to fund acq committments expected (239 planes for $11.7B). $1.3B of debt is secured (~62%) w/balance incl […]

Take Two (TTWO) new issue 11/10/11

$200m (+30m) sen unsec cb coming 2nite from JPM/BARC. Terms: 5yr bullet, 1.25-1.75% up 30-35%, pctns. UOP=gcp. Existing cb came 4.375% up 25 in 2009. We saw co in May; +ves=revised 5/12 revolver to 2016, profitable fcf+ even in yr w/o GTA release. Emerging mkt partnerships will come 2 fruition in 2013; exp proftiable thru […]

Human Genome (HGSI) new issue 11/02/11

$400m (60m) sen unssec cb coming this morning from Citi. Terms: 7yr bullet, 3% up 30%, full pctns. UOP = 2.25% 12 reupurchase/hedge/gcp. Will keep this short. Pls dont rely upon model, rely upon the track record of 7yr structures on credit names; MU A, ILMN, CX, BKD. Actually, look at 5yr credit names of late; […]

Nuance (NUAN) new issue 10/18/11

$600m (+90m) sen unsec cb coming tonight from MS. Terms: 20 yr, 2.5%-3% up 35-40%, call 6y, puts 6,10,15y. Full pctns. UOP=stk buy back/gcp. Good equity story/decent credit. Existing 2.75% cb (BB-) is big o/r name. Came in ’06 +22.5%, now trading 133 w/15% premium so o/r effect clear 2 see on way up. NUAN […]

Regeneron (REGN) new issue 10/17/11

$400m ($60m) 144a senior convert pricing overnight from GS. Terms: 5yr bullet, 1.375-1.875% up 30%, prot. UOP=warrant trans & gcp. $5.8B mkt cap w/one drug on mkt ($5m/qtr rev). Another awaiting approval in Nov which will have Roche competition. PF Cash = $915m, debt=$560m. Neg EBITDA & cash burn expected to continue thru 2012. We’ll […]

United Therapeutics (UTHR) new issue 10/11/11

$210 (+40m) sen unsec cb coming tonight from DB. Terms: 5yr bullet, 0.5-1% up 20-25%, full pctns. UOP = hedge/$212m stk buy back. Mktd to hedgers on swap/traders. Stock has nearly halved since April & fell 18% alone in Aug when Remodulin trial failed. 2.2B mkt cap now but a good credit; PF Cash = […]

Intermune (ITMN) new issue 9/13/11

$100m (+15m) sen unsec cb coming tonight from JPM/GS Terms: 7yr, 3.25-3.75% up 27.5-32.1% s/c ? 4yr @130%, pctns Concurrent 4m stk UOP= r&d, gcp Pulmonology/fibrotic disease specialist w/EU approval of its Esbriet (will be exclusive treatment for 2yr). Hopes to complete US Phase III within 2yr to resumbit for approval. A one-drug to riches […]

MF Global (MF) new issue 7/28/11

$300m (+45m) 144a senior unsec cb pxing tonight from GS/Citi. erms: 7 yr bullet, 2.875%-3.375% up 32.5-37.5, prot, UOP = repurchase $109m 9% cb, hedge. Since bringing 1.875% ’16 in Feb, co burning cash and drew down on revolver (will have $322m avail thru 6/14) PF cash = 809m, PF debt = 1.046b, LTM FCF […]