Coty (Secured; Ba2 Pos, BB+ Pos, BBB- Stable)

Coty has received its first IG rating from a Fitch upgrade last night. 28s are still pricing in HY, deleveraging contingent on headline performance holding to current guidance. Carry & roll there.

• The beauty retailer was a rising star favourite that had market pricing get tad ambitious late last year. Moody's put a stop to the positivity in February pointing out deleveraging meant less unsecured debt as a cushion for secured, upgrading all but the 26/28s (left unch at Ba2 Pos).
• The 26s have remained well tight but the 28s have been left in HY (at Z+141/B+195/4.5%). Note workout on the 5.75% line is to par call in September '27 (trading at €104).
• Moody's may wait out the $1.1b Wella stake sale (net debt at $3.7b). Co expects it to close by end of CY25 bringing leverage down to 2x. It's still targeting deleveraging in the interim to 2.5x by end of CY24 (from 3.4x in 3Q & 4.1x in FY23).
• Note debt load is still significant against cash generation- its guiding to FCF of $400m in FY24 (ending June '24), "with growth" in FY25 (c$550m). That's against net debt of $3.7b. Positive there is Coty does not pay out dividend.
• Front maturity is $ and € 26s - makes supply in near term unlikely.