$220m (+30m) sen unsec cb coming tonight from MS?JPM. Terms: 0.25-0.75% up 27.5-32.5%. full protections. UOP = 30m stock buyback, acquisition & note hedge. Stock up 47% ytd w/stock up 20% after Q4 earnings in Feb. Roll-off of cb market picks up this month (6B within 4 weeks) so new paper vital. Interesting equity; market leader in very competitive but very large sector (market potentially $100B globally, $35B US).
LTM EBITDA = 128m
PF debt = 220m
Cash = 384m
We’d assume L+400. ADV 840k
01/15 same delta calls 39bid, 2 yr90d 50/10ile = 53/40%, we’ll cap vol at 35%
Theo = 102.5. No obvious equity switch but +ves = balanced, 5 yr marginally cheap to model & market needs new par paper. Don’t focus too much on pricing, as its hard to picture this doing badly so get some exposure. BUY