Campari Group (CPRIM: unrated) €27s weak - we see value
€27s +7 today at Z+135/B+170/3.65%.
Fundamentals for the 3 spirit players below; 1) the higher capex combined with recent M&A spend is mainly coming out of cash that peers are sending to equity holders 2) the leverage bump was after a €1.2b acquisition in April and though it has no explicit target it has generally run BS in mid 2x or lower (currently reporting net 3.5x) 3) public equities (qtrly results, large analyst coverage) leaves us with less reason to price a unrated discount.
We see value on the 27s. Understand not the most liquid but a view valid well through the offer side. For Pernod/Diageo we see value in rotating into brewers with no spread give up - latter still expecting growth this year but subsector has Carlsberg M&A supply overhang.
Pernod reports first on the 17th of next month, Campari follows on the 29th.