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.

09-03-13 Cubist (CBST)

September 3, 2013 – 12:37 am

$600m (+100m) 2 tranche sen unsec cb coming tomorrow from MS/BARC Terms: <5y> 1⅝-2⅛% <7y> 2⅛-2⅝% up 27½-32½%,full pctns.UOP= OPTR/TSRX acq/cb hedge. OPTR acq=earnings accretive thru Dificil but our analyst is less enthused by the TSRX acq given generic competition over it’s main Tedzolid antibiotic. PFcash=890m,debt =1.05bn, LTMebitda=196m, FCF=150m. OPTR=credit +ve, we’d assume L+450/500 respectively […]

08-28-13 Qihoo (QIHU)

August 28, 2013 – 12:37 am

$550m (+50m) sen unsec cb coming tonight from CITI/UBS. Terms: 5yr 2.5% up 35-45%, put 3y, s/call @130% 3y, full pctns. UOP = GCP Stock +185% since 03/13 low, +4.4 fold since 01/12 & a $9.7B market cap. China & US cb mkt= uneasy history w/US shell hold co vs. assets domiciled away but tough […]

08-15-13 JDSU (JDSU)

August 15, 2013 – 12:39 am

$575m (+75m) sen unsec cb coming from MS/JPM Terms: 5y 0.75-1.25% up 35-40%. UOP = $100m buyback/gcp/terminate $250m revolver Partial happy meal. Great to see JDSU back. Co redeemed a large portion of 1% w/rest put back 05/15/13.   PF Cash = 952m Debt = 214m LTM ebitda = 214m FCF = 100m Q4 results […]

08-15-13 B2Gold (BTG)

August 15, 2013 – 12:38 am

$225m (+33.75m) sen sub cb coming tonight from JPM/BMO. Terms:   5y, 3-3½% up 35-40%. NC-3, SC @130% thereafter w/makewhole. UOP =GCP (development on new mines).   PF cash:320mm LTM EBITDA:140mm PF debt:295mm Gross  Lev: 2.1x, we’ll use L+650.   2yr 90d real vol= 88, but ADV=6mm (BTO CN), 830k (BTG US) and options  non-existant. W/ […]

08-09-13 Portfolio Recovery Associates (PRAA)

August 9, 2013 – 3:33 pm

$225m (33.75m) Sen unsec cb moving tonight from DB/WFC. Terms: 5yr 1% up 24.3-27%, s/c y4 @130% w/cnv ratio m/whole, full pctns. UOP = repay debt. Overnight deal so we’ll be quick; Company is a one stop Internet Service Provider and its stock +100% ytd. Like SERV, WWWW too posted a strong 2Q (stock +9%). […]

08-08-13 Web.com (WWWW)

August 8, 2013 – 3:33 pm

$225m (33.75m) Sen unsec cb moving tonight from DB/WFC. Terms: 5yr 1% up 24.3-27%, s/c y4 @130% w/cnv ratio m/whole, full pctns. UOP = repay debt. Overnight deal so we’ll be quick; Company is a one stop Internet Service Provider and its stock +100% ytd. Like SERV, WWWW too posted a strong 2Q (stock +9%). […]

08-08-13 Web.com (WWWW)

August 8, 2013 – 12:40 am

$225m (33.75m) Sen unsec cb moving tonight from DB/WFC. Terms: 5yr 1% up 24.3-27%, s/c y4 @130% w/cnv ratio m/whole, full pctns. UOP = repay debt. Overnight deal so we’ll be quick; Company is a one stop Internet Service Provider and its stock +100% ytd. Like SERV, WWWW too posted a strong 2Q (stock +9%). […]

08-07-13 ServiceSource International (SREV)

August 7, 2013 – 3:34 pm

$120m (+20m) sen unsec cb coming tonight from MS. Terms: 5yr, 1.75-2.25% up 30-35%, full pctns. UOP = call spread/gcp. Stock +2x from 11/12 low (+29% after Q2 earnings). Mkt leader in recurring rev/mgmt cloud technology. Rev +70% in last 5 yrs & FY exp rev = 270-274m, FCF 2-4m & PF Cash = 250m. […]

07-23-13 American Realty Capital (ARCP)

July 23, 2013 – 3:36 pm

***************** JEFFERIES CB NEW ISSUE COLOR: ARCP *********** $300m (+30m) sen unsec cb coming tonight from JPM/CITI. Terms: 5y 2½-3% up 20-25, full pctns. UOP=repay sec/line & gcp.Commercial REIT based in 48 states + PR. 2 key events ytd; Acq GE p/folio in June & LSE acq 4 $8.50/share in cash ($1.8bn). A fast growing […]

7-18-13 Jakks Pacific (JAKK)

July 18, 2013 – 3:36 pm

$100m (+15m) sen unsec cb coming tonight from ML. Terms: 5yr, 3.75%-4.25% up 25-30%, full pctns. UOP = repay portion 4.5% cb. Stk -10% > 2Q earnings miss & lowered FY guidance (already -30% from 09/12 high b4 halting). Liq OK in s/term but CO needs 2 align biz 2 changing play patterns/tech. AIM = […]