$1bn (+150m) sen unsec cb coming tonite from MER/CS. Terms: 5.5y 1½-2% up 25-30%, full pctns. UOP=stk buy back, note hedge/gcp.
HAPPY MEAL/1% TRS BRW. Let’s start here; HLF 2y(3/16) secured t/ loan is illiquid but quoted ~96 which=L+414. So then what should mkt use 4 a 5.5y unsec/cb at holdco? PFcash=892m,debt 1.95bn,LTM ebitda=795m,fcf=590m,gross lev=2.4x. We’d assume L+500 for 5.5y (Mkt cannot ignore 2y sec/t/loan). ADV=3.4m, 01/16 call=46iv bid 1y 100d=51%. If stk tanks, reality=free mkt brw disappears,u are forced 2 trade $1bn issue thru facility. Also,Sina/CTRP examples of no gamma on way down. We’ll cap @ 35%. 1% brw.Theo=96.9/98.8/ 100.8. Expect x/over demand, index inclusion BUT caveat emptor (as we saw w/SINA & CTRP) just a -ve headline is all it takes.