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.

6-18-13 Weyerhaeuser (WY)

June 18, 2013 – 3:37 pm

WY New Issue Color- “Outrights love paper” On the mids, the valuation of the new WY mandatory looks similar  to the recently issued Dominion mandatories. Using 31 and 28 vols and a 75 bps credit spread, these model about 1.25% cheap. While the valuation itself is fairly boring, it’s coming with a stock deal. That […]

6-17-13 North Star (NRF)

June 17, 2013 – 3:39 pm

— Original Sender: ****** DELETE, DAIWA CAPITAL MKTS — —> Daiwa New Issue Credit Color: NorthStar Realty Finance <— * REIT focused on commercial real estate assets, debt, and asset  management. * PF Cash    $685mm    PF Debt    $3996mm    LTM EBITDA   $402mm LTM FCF    $(295)mm  Debt/Cap   65%        Mkt Cap     $1650mm * NRF has been growing portfolio […]

6-12-13 Take Two (TTWO)

June 12, 2013 – 3:40 pm

$250m (+37.5m) sen unsec coming tonight from JPM/BARC/WFC. 5 yr, 0.5-1% up 40-45%, full pctns. UOP = redeem 4.375% CB/gcp. We’d use 400 for 5 year. 2 yr 50/10ile = 38.7/25.9. Same strike Jan 2015 LEAPs = 32 bid. We’ll use 32. Theo = 96.75. 1.75% have long been a fav of o/r community and […]

6-12-13 Allscripts MDRX

June 12, 2013 – 3:39 pm

$300m (+45m) sen unsec cb coming tonight from JPM/Citi. Terms : 7 yr 1-1.5% up 27.5-32.5%, full pctns. UOP = hedge/repay debt. Co has experienced a weak op/environment but vitals still relatively solid.   CB ranks behind sec/loan & revolver. We’d assume L+350 for 7 yr. ADV = 3.2m, low OI in leaps but 01/14 […]

6-11-13 Workday WDAY

June 11, 2013 – 3:42 pm

$440m (60m) sen unsec cb coming tonight from MS/GS?BARC. Terms Tranche A: 5 yr, 0.5-1% up 32.5-37.5%, full proctections. UOP = gcp/acq/hedge. Continuing trend of equity +dvd cb structures w/pre rate move coupons. Stock +32% from Feb low with a healthy $11.4B mkt cap now. Similar 2 CSOD with limited history (IPO in 2012) N/CNQR […]

6-11-13 Cornerstone On demand (CSOD)

June 11, 2013 – 3:41 pm

$220m (+33) sen unsec cb coming tonight from GS/CS. Terms : 5yr 1.25-1.75% up 32.5-37.5, full pctns. UOP = gcp/acq/hedge. Enhanced equity structure (stk + dvd). Stk +139% ytd & 55% in 2012. Fast growing $2B cloud based co which IPO in 03/11. We’d cap vol at 30%. Model is secondary tool, a sanity check. […]

6/6/13 Jarden (JAH)

June 6, 2013 – 3:42 pm

$250m (50m) sen sub cb coming tonight from JPM/BARC/WFC. Terms = 6yr, 1-5.5% up 30-35%, full pctns. UOP = gcp. 1.875% 2018 = darling of the O/R. In 3 pts like a lot of the rich balanced space of late. Came 1.875% up 34%, went out 115.75 vs close and xpar +39% & ICS of […]

6/4/13 Array Biopharma (ARRY)

June 4, 2013 – 3:43 pm

$100m (15m) sen unsec cb coming tonight from GS/JPM. Terms: 7yr, 3-3.5% up 27.5-32.5%, sc y 4 @130%, full pctns. UOP = repay debt. Biotech equity +dvd structure. Catalyst; pipeline = 2x cancer drugs exp 4 ph3 trials late 2013 and 2 x inflame drugs in ph2, data on asthma trials late 2013, possible Ovarian […]

6/3/13 Dominion (D)

June 3, 2013 – 3:43 pm

$1B (+100m) 2 tranche Mando coming tonight from JPM/MER/GS. Terms: tranche A $500 (+50) 04/01/16, 5.375%-6.125% +17.5-22.5% tranche B $500 (+50) 07/01/16, 5.5%-6%, +17.5-22.5%, full pctns. UOOP = gcp, repay s/t debt. Re-offer @49 Hedge funds will be exposed to 06/05/13 div so A will be 11 coupons and 12 dividends B will be 12 […]

5-29-13 Netsuite (N)

May 29, 2013 – 3:45 pm

$270m (40m) sen unsec CB coming tonight from HPM/Barclays. Terms: 5yr, 0.5-1% up 27.5-32.5%, full pctns, UOP = share repurchase, working play. PF debt = $273m PF cash = $423m EBITDA $25m FCF $46m 11x leverage. We’ll use 27% for 5 yr. Borrow GC Theo = 100.45 Mids floor of 84.5 and a balanced delta […]