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CREDIT SUPPLY: Bayer (BAYNGR: Hyb Baa3/BB+/BB+): FV Analysis

CREDIT SUPPLY
  • IPT: NC5.25 6.125%-6.25%; FV 5.625%-5.75%
  • The new notes will benefit from a Baa3 rating from Moody's but will still be excluded from the Bloomberg Euro Agg index due to the middle rating of BB+
  • Calculating Sub_Sen for Bayer is complicated by the extremely steep senior curve. Consequently, Sub_Sen is inverted with 6.625% Call28 +225 and 7% Call31 +203
    5.375% Call30 has Sub_Sen +195
  • I will take +210bps Sub_Sen for the NC5.25
  • Swap 2.35% Sen +119bps Sub_Sen +210bps = 5.64%
  • On the news front, Bayer currently has secured a disagreement between the 3rd and 11th District Courts of Appeal which increases the chance that the Supreme Court will have to opine on FIFRA legislation. If they win (it's an "if") then their Glyphosate problems are essentially over.

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