All about converts

$500mm (+75m) sen unsec cb coming tonite from MS/JPM/BOA/RBC/WFC Terms: 5y, 0 – ½% up 32½-37½%, full pctns. UOP=GCP/note hedge Potentially another good cap structure set up in the cloud space w/stk up 120% ytd. If you had not already noticed, sector trades v/tight;4.7y MDSO=L+280 (35vol), 4.7y WDAY A=L+195 (30vol), 4.5y N=L+75 (30vol) & 4.6y CNQR .5%=L+225 (30vol).CO reported good Q3 nos & raised guidance. LTMebitda -ve but ’14 estimate = $63m. We would be more comfortable using L+350 but you cannot ignore the comps so let’s use L+300.ADV=1.47m, no leaps with s/dated listed ~38iv bid. We’d assume 35vol. Theo=99.2/101.1/103.05. Optic rich /model ok. On a relative basis, L+340 vs comps has been a good entry pt HOWEVER when rates turn, cpn+tight spreads will hurt.