All about converts

$1B (150m) sen unsec cb coming tomorrow night from JPM/GS. Terms 5y, 0-0.5% up 45-50%, full pctns. UOP = $200m stock buyback/note/hedge/gcp. HAPPY MEAL. Stock +88% ytd & +98% LTM. PF Cash = 2.6B, debt = 1.1B, LTM EBITDA = 1.325B, FCF 975m, lev 1.2x. We’d assume L+125 for 5y ADV = 19m, 16/01 same strike ~36iv bid. We’d discount to 32% given skew/term. Theo = 101.2. 1.5B SNDK 0.5% came 10/13 0.5% up 35%, now 99.5 and cross par +34% so caveat emptor; Jumbo tech names fon’t always perform like CRM and JDSU. In fact BBB rated PCLN 0.5% came 0.35% up 66% in 05/13 and initially traded v/poorly. Tech has been weak in secondary of late. JDSU, CRM, SNDK and clouds so be aware of market environment when considering price. In short great trade for co and actually a good result for CB market. We want YHOO and more like it.