CONSUMER CYCLICALS: Essity; €29s on the move
(ESSITY; Baa1/BBB+)
€29s cheapening -0.3pts/+13bps to €88.8/Z+68. On spread it is at FV here (to a tad wide). I.e. no cost to trading the +11pts upside option (for those that do see chance of par call).
CMD coming up on Tuesday. Current stance from company is it disputes the "unfounded" demands for par repayment which has been made by "minority" of bondholders in €29/30/31s (all have 10pts+ upside to par).
We have had no view but market pricing on €29 (full unwind) vs. €31s (lagging move out) is tad confusing - both issued in 2021, €31s in Feb under the 2020 base prospectus but we see cessation of business clauses in both with same thresholds for material subsidiary. Please seek legal advice for firm views on docs but deviation between the two is somewhat normal - it's a tad more confusing here given cash px are similar and no cost to trading it using €29s.