Nuance (NUAN) new issue 10/18/11

$600m (+90m) sen unsec cb coming tonight from MS. Terms: 20 yr, 2.5%-3% up 35-40%, call 6y, puts 6,10,15y. Full pctns. UOP=stk buy back/gcp. Good equity story/decent credit. Existing 2.75% cb (BB-) is big o/r name. Came in ’06 +22.5%, now trading 133 w/15% premium so o/r effect clear 2 see on way up. NUAN siri t/nlgy in iphone 4s. Voice recognition is en vogue + EMR mkt will be firm going forward. We’ll use L+550. ADV = 2.5m, 0/1/14 same delta 43iv bid 1/13 47 iv. Given credit = greater confidence in model therefore ability to buy stk on way down. We’ll assume 35 vol. THeo = 104.6. A lot of premo but model likes it. o/r will like equity story (proven by 2.75% HDS, good size & mkt needs this typoe of paper. BUY

By convertarb, on October 18, 2011 at 5:50 pm, under Convert New Issue Analysis. No Comments
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