Wunderlich Securities Reiterates Covanta Rating And PT

This morning, Wunderlich Securities reiterated its Buy rating and $21 target on Covanta CVA shares. “On November 9, CVA announced a ten year $400mm senior debt offering with the net proceeds being used to fund its tender for the 1% senior convertible debentures due 2027,” Wunderlich Securities writes. “While these debentures have a long maturity and are well out of the money ($28.20 conversion price), they have a put option that becomes available to holders in 2012.” Wunderlich Securities added that the current offering and tender take the near-term (2012) refinancing risk and replace it with ten year notes with reasonable rates. The annual EBITDA and EPS impact is expected to be minimal, but will have annual after tax FCF impact of nearly $15mm. Covanta currently trades at $15.66.