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.

12-12-13 Sun Edison (SUNE)

$800m (+80m) sen unsec cb coming tonight from DB. Terms (A) 400m 5y, 1.75-2.25% up 25-30% (B) 400m, 7y, 2.5-3% up 25-30%. UOP = redeem 7.75% str8/repay $200m loan/note. $3.4B renewable energy co w/a semi biz which may potentially be spun out. Stk = 2.9x ytd. Pari/callable 7.75% w/3y exp life = OAS L+471 b4 […]

12-12-13 Alpha Natural Resources (ANR)

$250m (37.5m) sen unsec cb coming tonight from BARC. Terms: 7y, 4.5-5% up 45-50% full pctns UOP = repay debt/gcp 11 year old, $1.5B metallurgical/thermal coal producer. PF Cash = 1.01B Debt = 3.47B LTM EBITDA = 444m LTM FCF = -179m Gross lev = 7.8x CB pari w/B- 9.75% 2018 which back out L+675. […]

12-11-13 E House (EJ)

$180m (20m) sen unsec cb coming tonight from CS. Terms: 2.25%-2.75% up 30-35%, put 3y, full pctns, UOP = 20m stk buyer back/$50m 4 cb hedge/gcp. SFUN & EJ represent the second wave of smaller Chinese credits to tap our markets. $1.7B real estate internet service biz with stock +2.6x since 04/13. Lets compare Qihu […]

12-10-13 Post (POST)

$300m (+45m) perpetual pfd coming tonight from GS/CS/WFC. Terms: 2-2.5% up 10%, s/c 5yr@150% (86.806), full pctns. UOP = gcp/acq. 100 yr old $1.7B cereal producer. Not exactly a CEREAL issuer but existing $242 came 02/13, 3.75% up 25% w/4.2 call pctn now. 22 vol backs out L+850 (125.5 vs 52.61) w/3.7y b/e (75 bp […]

12-10-13 Trulia (TRLA)

$150m (22m) sen unsec cb coming tomorrow night from JPM/DB. Terms: 7y, 2.25-2.75% up 30-35%, s/c @130% make whole, full pact. UOP = $30m stk buy back/$7.2m = pay off facility/gcp   Online real estate research engine founded in 2005. Stock was up 220% to Sept but is now 42% off high with housing market […]

12-10-13 Yandex (YNDX)

$600m (+90m) sen unsec 144a/REG S cb coming tomorrow night from GS. Terms: 0.75-1.25% up 35-40%, full pctns. UOP = stk buyback (+3m to 15m repurchase program). $13B russian search engine w/60% mkt share. STK +100% from 03/13 low. Credit is solid PF Cash = 995m Debt = 600m LTM EBITDA = 505m FCF = […]

12-09-13 Finisar (FNSR)

$200m (#0m) sen unsec cb coming tomorrow night from ML. Terms: 20yr, 0.25-0.75% up 37.5-42.5%, HC 5y, puts 5, 10, 15y. full pctns. UOP = gcp/working capital cap. $2.1B optical telco equipment biz w/stk +85% ytd. FNSR is a decent credit;   PF Cash = 483m Debt = 240m LTM ebitda = 164m FCF = […]

12-04-13 SouFun (SFUN)

$250m (+50m) sen unsec cb coming tonight from CITI/JPM/MS. Terms 5y, 1.75-2.25% up 35%-40%, 3y put, full pctns (div adj > 0). UOP=gcp/working cap. Deja vous; a Chinese tech stk @ all time high & +2.7 ytd issuing a 5y/3y put structure.   Stated PF Cash = 565 Debt = 701 LTM EBITDA = 314 […]

12-04-13 Proofpoint (PFPT)

$150m (+22.5m) sen unsec cb coming tomorrow from CS/DB.Terms: 5y 1-1½% up 27½-32½%, S/C 4y @ 130% (stk make-whole), full pctns UOP=gcp/cap ex. $1bn data pctn biz founded in ’02 w/a formidable list of competitors; EMC/SYMC/CSCO/GOOG/MSFT/INTC/HPQ w/an avg mkt cap of $146bn. Stk 144% ytd due largely to the conversion to cloud & t/o speculation.PF […]

12-03-13 GTAT (GTAT)

  $125m (18.7m) sen unsec cb coming tomorrow from MS/GS. Terms: 7y, 3-3.5% up 30-35%, full pctns. Concurrent 12m stk placement. UOP=gcp/working capital. What a turnaround! Stk +2.2x in LTM w/co signing the Sapphire Substrate manufacturing pact w/APPL just 1m ago. Existing 3% 2017 (3.82y) back out L+40 (40%), L+241 (35%). A diff $px/profile so […]