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Bayer Snr lines (Baa2 Neg, BBB Pos, BBB+ Neg) are 2-6ps tighter this morning.

HEALTHCARE
  • Against VTRS (Baa3 S, BBB- Neg) - which has committed to deleveraging this year to hold onto ratings - Bayer may have room to tighten.
  • The Asundexian drug failure & $1.5b payout decision in late Nov drove the first step of underperformance and was followed by the $2.25b payout in late Jan - though it did reverse some of that on the dividend cut the equal amount in dividend savings (per year that is - over the 3 years more than the payout decision) seemed to not give cash enough of a tailwind to move back tighter (relative vs. VTRS).
  • Adding to that its reversed back to early Feb wides recently (on VTRS outperformance).
  • That's also in contrast to Bayer 5yr CDS - its held onto ~tights post the dividend cut, but still ~+20bps from Jan levels. Basis looks wide here as well (cash cheap).
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