10/03/12 ARCC
$200m ($30m) sen unsec cb coming tonight from JPM/GS/DB. Terms: 5.25y, 4.25-4.75 up 17.5-22.5, full pctns. UOP=repay dbt/gcp. 4th sequel in ARCC w/progressively worse cpns; 5.75% +17.5% in 01/11, 5.125% +17.5% in 03/11 & then 4.875% +17.5% in 03/12. Interestingly, all 3 priced off a 16c stk range over 14m period. They have done ok but 5.75% due 2 $575m size (index inclusion & o/r sponshopship) has outperformed. New paradigm = 1 big deal performs better than 3 small serials. 4.875% tap would be better for market but you are up against very efficient financial engineering (co wants 2 swap sen4sub & push out maturities) 4 model, L+475/20 vol. Theo = 99.25. We want new issues, get them in the system but @ moment we prefer more liquid 5.75/5.125. AVOID