$200m (+30m) sen unsec cb coming weds from MS/GS. Terms: 6yr, 3-3.5% up 25-30%, 4yr s/c @130%, pctns. Concurrent 30m (+4.5m) stock offering UOP=gcp. Stk up 4x since 05/12 low, 5yr CDS 2300 bp tighter (150bp on last night’s announcement) & existing 3% cb up 1.5 pts (2.9% up 54% x/par +65%, using L+500/75bp brw 33iv). Co has done a good job pushing out maturities (leaves only $55m due 2015 b4 existing CB (see credit color). 5yr CDS 530/560 & 6yr CDS 545/585. Brw is off top (-0.5 to -1 range) w/expectation that placement will help ADV=4.2m, no leaps, 2 yr 50/10ile = 64/42 however unless you set up vs. CDS (esp given move) we are going to cap vol at 35%, use L+585 & 75bp brw. Theo = 107.5/105.5 mid/rich. Cheap no question Given move some CDS protection is advisable however BUY
* Leading provider of private mortgage insurance.
PF Cash $723mm
PF Debt $900mm
LTM EBITDA NA
LTM FCF $(511)mm
Debt/Cap 55%
Mkt Cap $1090mm
* Gradual housing mkt recovery & reduced FHA competing insurance is +ve for mort insurers, but mkt remains difficult. Losses expected to continue as they work thru legacy book. RDN has been focused on preserving cap & pushing out debt maturities. All ’13 debt repaid. Exch offer on ’15 debt has pushed most out to ’17, leaving only $55mm due in ’15. Proceeds from conv & stk offering provide liquidity to fund new biz & provide add’l cap to subs if risk-to-cap ratios require injection.
* Our assigned spread —>L+600<— Src: Co Filings, Bloomberg