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BASIC INDUSTRIES: Prysmian (PRYIM NR/BBB-[N]/NR): Credit Overview

BASIC INDUSTRIES
Credit BulletsCEEMEAEurozoneItalyBullet

Strong operating backdrop and encouraging creditor policies. The main question relates to the S&P negative outlook; IG should hold as a base case but margin for error is low. Spread will need to reflect that.

  • Global leader in cable solutions. EBITDA breaks down as 49% electrification, 26% power grid, 17% transmission and 8% digital solutions. Clearly these are growing markets; consensus expects 13% revenue growth next year.
  • UOP is to refinance bridge debt for its acquisition of Encore Wire (€3.9bn EV). It expects €140m synergies within 4 years – about 7% of FY24 adj. EBITDA.
  • It has a financial policy of maximum 1.5x company defined net leverage, with 2x allowed temporarily for acquisitions, with a strong commitment to IG. We see 2.3x for FY24. Maximum 30% FCF to be distributed, which supports deleveraging.
  • S&P put it on negative outlook following the acquisition. At the time it didn’t have a stated leverage target, which S&P took negatively. It said the acquisition left no ratings headroom, with targets for FFO / debt to be close to that required in its base case out to 2026.
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Strong operating backdrop and encouraging creditor policies. The main question relates to the S&P negative outlook; IG should hold as a base case but margin for error is low. Spread will need to reflect that.

  • Global leader in cable solutions. EBITDA breaks down as 49% electrification, 26% power grid, 17% transmission and 8% digital solutions. Clearly these are growing markets; consensus expects 13% revenue growth next year.
  • UOP is to refinance bridge debt for its acquisition of Encore Wire (€3.9bn EV). It expects €140m synergies within 4 years – about 7% of FY24 adj. EBITDA.
  • It has a financial policy of maximum 1.5x company defined net leverage, with 2x allowed temporarily for acquisitions, with a strong commitment to IG. We see 2.3x for FY24. Maximum 30% FCF to be distributed, which supports deleveraging.
  • S&P put it on negative outlook following the acquisition. At the time it didn’t have a stated leverage target, which S&P took negatively. It said the acquisition left no ratings headroom, with targets for FFO / debt to be close to that required in its base case out to 2026.