CONSUMER CYCLICALS
Curve screens fair to us now after a ~20bp rally over the last month (including against close comp's). Next event of interest for us is 1Q24 earnings in early May - we are keen to hear mgmt's take on any impact from Italian regulators' & any updates on Spain regulator draft fine. Cash lines strong 2-5bps tighter today.
- BKNG has always screened wide to us - not a new phenomena for it but we are starting to see some signs of that finally reversing.
- It came to primary in late Feb, we liked the name then but markets didn't take it well - secondary selling off +7-11bp on €2.7b/4-part deal. It was then trading well wide of 2-notch lower close comp Amadeus (Baa2, BBB) & in-line with FedEx and Transurban (which we included solely to highlight the size of the reverse yankee discount). Its since moved firmly tighter to all 3 - before and after below.
- As we've highlighted there is some overhanging uncertainty on the draft Spain regulator (CNMC) fine for ~$530m which it said it would appeal & any fines on recently launched investigation from Italian competition watchdog (AGCM) - fines unlikely to impact BS ($13b cash on hand & $7b/yr in FCF) but changes to business practices could. Company reports 1Q24 results on 2nd of May - we expect it to comment on Italian investigation then.
- Curve screens fair to us now and as we've mentioned before we see better opp's in certain tenors; on the 34's the equal rated & short-tenor Wesfarmers/WESAU 33's that only gives away -2bps screens cheaper (likely on single Aussie issuer discount) - it does seem to trade - & on the newly issued 44's, ABIBB 44's are only -4bps inside/screening more value.
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