Birkenstock (BIRKEN; NR/B/BB)

• €29s on BVAL offer side are at 4.6%/Z+118 to worst in 2yrs & 5.0%/Z+196 to maturity in 5yrs. May be temping on headlines today, we don't have much colour to add on par-call chance in '26 (screens cheap for those that do). New Finnair 29s at Z+204/5.1% that has similar single name risk screens more value to maturity on government support (4-notch higher on bond ratings) but came with only 3m par-call. Note S&P standalone ratings are equal for the two.
• S&P seems to be lagging here in single B territory in part on IPO linked deleveraging changing BS rapidly. It wants to wait and see if that was one-off or if mgmt stays conservative & works towards stated net 2x within ~1yr & 1x over long-term. In particular its flagging original PE owners, Catterton, still holds controlling stake of 80%.
• Net leverage (see link below) is now at 2.6x, revised FY EBITDA guidance (Mid-point €540m) will take 0.2x off, remaining only requires €220m reduction.
• Its only other debt outside the €430m 5.25% bond is €175m in leases & €680m in 2028 term loans (split across $ and €) - repayments on these have been prioritised thus far (took down bulk of the $ loan last year). Refi to cheaper debt in 2yrs when par call kicks in is a distinct possibility & is to worst on yields.
• The risks are significant on single brand & product type (70% of sales from 5 core models). Though EBITDA margins run in low 30%s, cash conversion is not great on FCF at €145m last yr against revenue of €1.5b and EBITDA of €480m; leaves FCF/gross debt at ~10%.

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