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.

Health Care REIT (HCN) new issue 11/14/06

November 14, 2006 – 3:52 pm

$300m [+45m] senior cb on HCN from UBS & DB pricing tonight Terms: 20yr, 4 3/8- 7/8% up 20-25%, nc5y, puts 5/10/15, dvd & t/o prot. Proceeds to buy additional properties & repay credit fac. HCN has 477 facilities in 38 states. 5yr CDS @ 55bps. Weekly vol is 17%. Listeds are scant. ADV stinks […]

Greenbrier (GBX) new issue 05/16/06

May 16, 2006 – 3:25 pm

$85m [$15m] senior unsec cb on GBX pricing tonight from BS/Boa. Terms 20yr, 2 1/8-5/8% up 27.5-32.5%, nc7, puts 7,10,15 t/o dvd prot. This deal was a real eye opener this am. GBX is a $625M mkt cap that burns cash. We were surprised to see that their pari-passu 8.75% trades at L+195. Pro-forma leverage […]

Mentor Graphics (MENT) new issue 02/27/06

February 27, 2006 – 3:28 pm

Original research I would use L+400 as the credit spread for the new MENT $175M 6% up 65 convert issue with 7 year put. Proceeds will be used to retire the existing $171M 6.875% convert. After the offer, MENT will have $95M in cash and $$285M in debt ($175m new converts and $110m floating converts […]

Omnicare (OCR) new issue 12/13/05

December 13, 2005 – 5:00 pm

$750 (+15% shoe) deal from LEH/JPM/CIBC pricing tonight con-current w. $750 common +$750M sr sub notes. 3.125%-3.625% up 32.5-37.5%. 30 yrs, NC 10, put in yr 10 only, 130% coco 120%copa. Div prot above $0.0225/qtr. Convert is structually SUB to new sr sub notes which have OCR Holdco guarantee. OCR is the largest provider of […]