BASIC INDUSTRIES
- Spreads were +6bp on the week, in-line with the index. AGCO (+27) and CNHI (+15) were hit afresh with weak outlook from Deere & Co. German industrials generally underperformed due to macro weakness.
- Amcor’s takeover of Berry Global appears manageable from a credit perspective, with BERY bonds benefitting from convergence. S&P indicated Amcor ratings would likely be unaffected. Moody’s took a harder stance, moving to review for downgrade. It was already negative outlook, on stretched metrics. All three agencies moved Berry to watch positive.
- Moody’s issued a periodic review of Lanxess one year on from the last downgrade. Metrics are well into HY at this point but the tone of the update suggested reluctance to pull the trigger.
- Thales is under investigation for suspected bribery and corruption. It’s unclear at this point how far this could go; Airbus’ 36% of EBITDA in 2020 was a record fine for a wide ranging bribery scandal.
- Deere posted stronger-than-expected 4Q results, bucking the trend from AGCO and CNH Industrial. FY25 outlook was weak, however.
- We looked at Prysmian ahead of its return to the € market. The fundamentals and financial policies are supportive for credit, with outlook negative at S&P the only niggle given the BBB- rating. We saw 13/8bp NICs on these, exactly mirrored in secondary tightening at the time of writing.
Smurfit Westrock also came to the market with 8Y and 12Y bonds, its first issuance post-merger.
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