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CAPITAL GOODS: MTU Aero Engines (MTXGR Baa3[P]/NR/BBB): New Issue Performance

CAPITAL GOODS
  • MTXGR 3.875 09/31 was issued at B+204.4 and is quoted an impressive 21bp inside reoffer.
  • At Z+148, that puts it inside where we would extrapolate the ROLLS (Baa3/[P]/BBB[P]/BBB-[P]) curve (150 area).
  • ROLLS risk looks relatively more attractive to us; we expect positive ratings momentum sooner with ROLLS further down its recovery path than MTU in our opinion. Spreads were at mid triple B levels before the A350 story, currently closer to low triple B levels again.
  • Nonetheless MTXGR remains quite wide for the rating also.
     

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  • MTXGR 3.875 09/31 was issued at B+204.4 and is quoted an impressive 21bp inside reoffer.
  • At Z+148, that puts it inside where we would extrapolate the ROLLS (Baa3/[P]/BBB[P]/BBB-[P]) curve (150 area).
  • ROLLS risk looks relatively more attractive to us; we expect positive ratings momentum sooner with ROLLS further down its recovery path than MTU in our opinion. Spreads were at mid triple B levels before the A350 story, currently closer to low triple B levels again.
  • Nonetheless MTXGR remains quite wide for the rating also.