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.

05-15-15 TAL Education Group (XRS)

$200m (+30m) sen unsec cb coming tomorrow night from MS/DB/JPM. Terms: 5y, 2¼-2¾% up 27½-32½, 3y put, full pctns. UOP=note hedge/gcp. $2bn after-school tutoring biz, founded ’03. Operates 274 learning/251 service centres &/it’s eduu.com online platform Stk +2.8x in LTM.Stated PFcash=365m, debt=200.8m, LTMebitda=74.8m, fcf=90m, gross lev=2.7x. Jef eqty analyst=BUY rating w/$30 target (using 30x ’15 […]

04-23-14 Citrix (CTXS)

$1.25B (+187.5m) sen cb, pricing post-close Thurs from JPM, GS, BOA, RBC, DB, WFC. Terms: 5yr, 0.25-0.75% up 47.5-52.5%, pctns, Happy meal, UOP = CB note hedge/GCP. Reported earn post-close: FY guided higher, but Q2 guidance revised slightly lower. PF Cash = 484m PF Debt = 1.25B LTM EBITDA = 725m LTM FCF = 193m […]

04-03-14 51job (JOBS)

$150m (+22.5m) sen unsec cb coming tonight from JPM. Terms: 5y, 2¾-3¼% up 25-30%, 3y put, full pctns.UOP=note hedge/gcp.$2.1bn Chinese online recruitment provider, founded ’98. Stk +34% from 05/13 low. Periods of over issuance; REITs ’07/08, BDCs ’10/11, Mrtge REITs ’12/13, Chinese internet ’13/14?? Lets look @ China; SINA=L+440,QIHU=L+490,CTRP=L+579,VIPS=L+780,SFUN=L+775,EJ=L+980, YY=L+1036 (40%). No arb here, spreads […]

03-24-14 Solazyme (SZYM)

$100m (+15m) sen sub cb coming tonight from GS.Terms: 5.5y,5-5½ up 20%, full pctns, Cncrrnt 5m (+750k) stk placement. UOP=cap ex /gcp. $900m renewable oil & bio-product manufacturer (converts algal biomass into biofuels). Stk +109% from 04/13 low to recent 03/14 high (-22% from high today). PFcash=215m, debt=193m (82m of 6% CB sub to new […]

03-24-14 National Health Investors (NHI)

$175m (+25m) sen unsec cb coming tonight from MER/JPM. Terms: 7y 3¼-3¾% up 17½-22½%, full pctns. UOP=repay facility/gcp. $2bn Health care REIT primarily in l/term care & sen/housing. ’13 was busy; JV w/Bickford sen/living, acq of Inn at Halcyon Village & 25 living facilities from Holiday acq holdings etc. NHC=largest customer (leases 41 facilities). PFcash=11.3m […]

03-18-14 Navistar (NAV)

$350m (+52.5m) sen sub cb coming tonite from JPM. Terms: 5y, 4¼ -4¾up 57½-62½, S/call y3 @ 130%, full pctns. UOP=retire some of 3% sen/sub CB. $2.8bn class 4 to 8 commercial truck & diesel engine manfctr. Recently issued $200m CB in 10/13; 4.5% up 60% due 10/18 (4.6y), now -1.75pts post announcement,x/par 4.5% +69% […]

03-18-14 Emerald Oil (EOX)

$125m (+18.75m) sen unsec cb coming tonite from CS/BARC. Terms:5y 1¾-2¼ up 32½-37½%, full pctns. UOP=Repay revolv/acq/drilling dev & acq.$452m E&P w/85k net acres based in the Williston Basin (NDakota/Montana).75% of area operated & 17 wells drilled 2 date Avg daily Production in 4q13=2430 boe/d w/14 guidance 3550 boe/d (87% oil/13% gas). PFcash=213.75mm w/288.75m liq, […]

03-18-14 YY (YY)

$400m (+60m) sen unsec cb coming tomorrow nite from CITI/JPM. Terms: 5y, 1¾-2¼% up 35-40%, put 3y full pctns.UOP=GC.History; 11/13 $250m 1⅜+42.5% becomes 2⅜+40% reoffered @99->Gets pulled Why now ? stk +76% along w/many China internet stks. PFcash=615m debt=400m,LTMebitda=96m (exp 2 be 145m FY14/211m FY15). 6.75bn 2.75y SFUN ~L+800, 8.5bn 3y VIPS ~L+770, 1.9bn 2.75y […]

03-13-14 Carriage Services (CSV)

$130m (+18m) sub cb coming tonight from MER. Terms: 7yr, 2.75-3.25% up 27.5-32.5%, full pctns. UOP = repay jun/sub cb & facility. $340m funeral home & cemetery operator (161 f/homes in 26 states & 31 cemeteries in 10 states) Co has history of acq smaller ops ($83m in last 3 years). Much larger comp = […]

03-11-14 Jarden (JAH)

$600m (+90m) sen sub cb coming tonight from BARC/CS/JPM. Terms: 20 yr, 1-1.5% up 20-25%, 10 yr s/c @130% & 10 y put, full pctns. UOP = $250m stock buyback/gcp. Partial happy. $8.8B consumer product manufacturer w/stock +49% since 03/13. Existing 4.5 1.875% came 09/12 +34% w/be exiting the UBS index tomorrow (>140). Pre-deal 143.875 […]