All about converts

$200m [+30m] sr cb from JPM/GS pricing tonight. Terms: 5yr 2.25-2.75% up 22.5-27.5, nc-life, protections. Partial Happy Meal, UOP = gcp, potential M&A, call spread. NuVasive is a medical device so focusing on spine products [$1.3B mkt cap]. It’s an interesting growth story but not a great credit. EBITDA has turned positively. This will be their only debt. We’ll use L+750. Vol has historically been in the 30s but daily has been 40s. We’ll use 37%. Theo=99/101.125/103.25. KYPH was their best comp until MDT bought them, which leaves MDT and JNJ as NUVA’s biggest comp. Good story with takeout potential. But protect yourself in this market. get paid for credit risk, push for cheaps.