$150m (22.5m) sen unsec cb coming tonight from BNP/UBS/JPM/RBS. Terms: 14.5 yr, 7.5-8% up 156%, IP=90, put/call 8, full pctns. UOP = repay debt/gcp. 1:1 tender: issue of new cb (co has tripped loan covenant, has to reduce $150m 8.125% str8 & $200m 4.625% cb). Tender/new issue not contingent for holders (ie independent books) but new issue is contingent upon successful tender. 4.625% w/03-16 put ~88 pre-event ~L+825, 10 yr CDS ~24 pts = L+1000, we’ll use L+1000 4 new CB. We’d obv use higher vol if u lock into option w/CDS, o/wise obv discount for a $375m mkt cap (ADC = 1.45m). We’ll use 35%. Theo = 92.24. Let’s say you do hedge w/CDS 45 vol = 96.75 (assumes CDS is deep/reliable enough 2 rehedge on way down). Not an 8yr credit we like PLUS not CHEAP enough. AVOID