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Carrefour (CAFP; Baa1, BBB; S) Company Responds

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  • Carrefour has responded (here) saying it "vigorously contests the Ministry of the Economy's grievances regarding the management of its franchise network, as well as the totally disproportionate nature of the fine, which can only be decided by the court to which the case is referred."
  • It goes on to add that "a minority of franchisees who disagree with Carrefour have unsuccessfully challenged the attractiveness and growth of the model" re. current cases which Ministry is intervening in.
  • Unclear if this will help ease impact/scope on clause changes ministry has requested in contracts. Bernstein were out with bullish views this morning on similar grounds adding it only impacted 200 of 2,000 franchises (Reuters). Source of it's numbers unclear.
  • Cash curve is unch to +2 (i.e. muted), switches into WOWAU28s (Baa2/BBB) & TSCOLN31s (Baa3/BBB-) give spread pick-up and are into cheap views of ours. The short-term credit impact may not be as large as equity px moves are pricing today, but regardless not a curve we see any value in.
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  • Carrefour has responded (here) saying it "vigorously contests the Ministry of the Economy's grievances regarding the management of its franchise network, as well as the totally disproportionate nature of the fine, which can only be decided by the court to which the case is referred."
  • It goes on to add that "a minority of franchisees who disagree with Carrefour have unsuccessfully challenged the attractiveness and growth of the model" re. current cases which Ministry is intervening in.
  • Unclear if this will help ease impact/scope on clause changes ministry has requested in contracts. Bernstein were out with bullish views this morning on similar grounds adding it only impacted 200 of 2,000 franchises (Reuters). Source of it's numbers unclear.
  • Cash curve is unch to +2 (i.e. muted), switches into WOWAU28s (Baa2/BBB) & TSCOLN31s (Baa3/BBB-) give spread pick-up and are into cheap views of ours. The short-term credit impact may not be as large as equity px moves are pricing today, but regardless not a curve we see any value in.