Not surprisingly, this deal's optics as initially discussed, combined with its size and the poor initial performance of Twitter's convertibles, drove a repricing, with the coupon coming at the cheap end (0.5%) and the premium reduced to 35%.
As priced, the deal received an outstanding HOCS (Hillside Overall Convertible Score) array--the best we've seen yet in HOCS' brief history. The deal terms led to a HOCS array of 80 Overall/77 Growth/86 Safety. With the bonds expanding significantly and currently quoted around 103 with the stock around 222, the updated HOCS array is 75 Overall/72 Growth/81 Safety, still an excellent rating. (For purposes of comparison, our preliminary HOCS array based on the midpoint of the initial price talk was 76 Overall/71 Growth/87 Safety.)
We continue to favor these bonds as a major core holding.
Speaking of the Twitter convertibles, the blended score of the two bonds (we slightly favor the longer-dated, higher coupon 1%, which trade at a marginally lower price) is 68/74/56--a strong array but not nearly as attractive as LNKD.