CONSUMER CYCLICALS
- IDS has rallied in and near term catalyst are skewed negative including lacklustre guidance and potential refi supply from Daniel K buy-out. We are still marginally skewed to see value on €28s (1.25% step-up protection for HY ratings) but far from outright value we saw earlier this year.
- Rentokil earnings look in controlled and activist investor Peltz seems to already be having a impact on trimming the business (costs & rumoured asset sales). We are not sure if it is the past PE rumours (since dismissed by other sources) that are keeping high cash-px lines wide - hedge using the Rentokil 28s (+8pts to par, Z+57bps of carry) if that is a worry.
- Pluxee - numbers including guidance remain firm but Edenred citing large impact from potential Italian regulation - even with Pluxee's small (<3%) exposure - seems to have soured market appetite for the name. We will circle back.
- Finnair - numbers were weak on falling airfares and sticky non-fuel costs. Perhaps not helping it on RV, we have had peer issuance from both Air Portugal and TUI cruises. Both are "on the rise" re. fundamentals - priced for now but still makes Finnair look somewhat bland. We also wouldn't completely ignore Russia/Ukraine tensions for a country that borders the former.
- bpost - we added this name after rough pricing in primary which reflected poor fundamentals and high leverage (on a acquisition) trumping govvie ownership and uplift (+3). Results remain weak but with 5Y at Z+100, a name to watch when/if it does manage a turnaround.
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