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CONSUMER STAPLES: Walgreens Boots (WBA unsec; B1 Stable/BB Neg) results ahead

CONSUMER STAPLES
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26s cross above Z+300 again (eqv. €93.5/5.5%) as earnings approaches on Tuesday in US pre-market. £25s are holding better at 2% over benchmark. WBA is one of our 5 highest beta earnings this quarter across consumer & transport. We will circle back if we have anything specific to say. Updates since last earnings;

  • 27 June: 3Q results with a FY guidance cut and weak commentary (equities -20%, $ lines up to +70bps on the day)
  • 1 July: confirms Boots CEO is stepping down after rumours emerged over the weekend. A rumoured spin-off and IPO was effectively dismissed in Q3 results
  • 11 July: Moody's comes with a double-notch downgrade from Ba2 to B1 on senior unsecured (no secured debt).
  • 19 July: S&P finally moves off IG with a double notch downgrade from BBB- to BB and stays on neg. outlook.
  • 2 Aug: Continues selling down publicly listed Cencora stake; 2% sold-down this time for $1.1b. 10% stake remains (at current market cap; $4.4b in value).
  • 9 Aug: Confirms considering restructuring options on its stake in VillageMD (sits under loss-making US healthcare segment) and discloses a $1.75b secured TL has seen defaults the week prior - a forbearance agreement has been entered into with Village MD.
  • 9 Aug: On same day comes to $ market with a $600m 5NC2, IPT well wide at 8.25-5%. Upsizes to $750m and prices at 8.125% with a 90-100bp NIC. Secondary held stable. Line performs very well (+2.75pts) in the weeks following (now +30bps wide of pricing).
  • 16th Sept: agrees to a $106.8m fine to resolve allegations it billed gov. for prescriptions never dispensed (between 2009-2020). Had $703m cash before $ issuance/at end of May.

YTD spread moves (bps)

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26s cross above Z+300 again (eqv. €93.5/5.5%) as earnings approaches on Tuesday in US pre-market. £25s are holding better at 2% over benchmark. WBA is one of our 5 highest beta earnings this quarter across consumer & transport. We will circle back if we have anything specific to say. Updates since last earnings;

  • 27 June: 3Q results with a FY guidance cut and weak commentary (equities -20%, $ lines up to +70bps on the day)
  • 1 July: confirms Boots CEO is stepping down after rumours emerged over the weekend. A rumoured spin-off and IPO was effectively dismissed in Q3 results
  • 11 July: Moody's comes with a double-notch downgrade from Ba2 to B1 on senior unsecured (no secured debt).
  • 19 July: S&P finally moves off IG with a double notch downgrade from BBB- to BB and stays on neg. outlook.
  • 2 Aug: Continues selling down publicly listed Cencora stake; 2% sold-down this time for $1.1b. 10% stake remains (at current market cap; $4.4b in value).
  • 9 Aug: Confirms considering restructuring options on its stake in VillageMD (sits under loss-making US healthcare segment) and discloses a $1.75b secured TL has seen defaults the week prior - a forbearance agreement has been entered into with Village MD.
  • 9 Aug: On same day comes to $ market with a $600m 5NC2, IPT well wide at 8.25-5%. Upsizes to $750m and prices at 8.125% with a 90-100bp NIC. Secondary held stable. Line performs very well (+2.75pts) in the weeks following (now +30bps wide of pricing).
  • 16th Sept: agrees to a $106.8m fine to resolve allegations it billed gov. for prescriptions never dispensed (between 2009-2020). Had $703m cash before $ issuance/at end of May.

YTD spread moves (bps)

Keep reading...Show less