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AB InBev (ABIBB; A3, A-; S); new issues trade sideways, BI analyst weigh in

CONSUMER STAPLES
  • Bloomberg credit analyst weighing in on AB InBev, net positive noting mgmt is prioritising deleveraging (current 3.4*, target 2*) over shareholder returns & M&A.
  • They do note that 1) would require sizeable debt paydown 2)North America weakness in sales may drag on FCF 3) vs. similar rated beverage beers leverage is higher.

As we mentioned when it came to market last week, we see secondary fairly priced (in € that is - see £29/37's tight) for last yrs upgrade into A- & see no rating risk in either direction. It did struggle on €4b/3-part supply both in secondary (outside shorter tendered lines) & in primary (NIC's against our FV were high single to low double digit). The 20yr/44's pricing 4bps shy of the Booking.com 44's (A3, A-;S) - a more discretionary name that has traded with a reverse yankee discount - was tad surprising/wide to us.

New issues have traded sideways since.

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