Price line (PCLN)
$875m (+125m sen unsec cb coming tonight from GS. Terms: 6yr, 1% up 50%, reoffered 98.5-99.5, full pctns. UOP=$200 stk buy back/gcp. Happy Meal for those who want. Put this into perspective; stk up 35% ytd, up 270% from 03/2010 1.25% issue and this will be struck up another 50%. The model likes it; using L+200 for 6 yr BBB+ (bonds apparently will be rated 2 notches > than 1.25% issue). We’ll use 32% (2yr 90d 10/50 ile = 27/40). Them = 102.5 & so ¾ pts cheap over 6 years. Not exactly exciting but decent SBV (87.5 using L+200 and 90 using L+150), limited IG options plus dynamic of index means that these will trade well over time despite optics/strike and historic stk performance. We’d prefer 98.5 to 99 but are realistic.