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Deutsche Post (DHLGR; A1/NR/A-) CMD

CONSUMER CYCLICALS
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  • Strategy day ongoing. Note it is targeting "BBB+ to A-' rating vs. current A-flat rating (Moody's) and has noted the headroom there. We see it currently gross/net 2.2/1.9x levered - it will likely push that up on a combination of equity pay-outs & M&A.
  • The curve is perennially tight; 29s trade through swaps and is likely helped by the 1k/open to retail denominations (exception is the convertible that is 100k).
  • The German Development bank, KFW, reduced it stake to 17% earlier this year. Moody's no longer considers it a government related issuer = lower assumption of gov. support - but still factors it as support for A2 ratings.

No firm view on the curve given the 1k denoms. It looks like it has pre-funded this years upcoming maturity with the €1b 12Y in March but given headroom on BS we wouldn't rule out a revisit. The new line does trade at more reasonable levels and has underperformed; priced at +85 vs +97 now (long-end €IG +7).

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  • Strategy day ongoing. Note it is targeting "BBB+ to A-' rating vs. current A-flat rating (Moody's) and has noted the headroom there. We see it currently gross/net 2.2/1.9x levered - it will likely push that up on a combination of equity pay-outs & M&A.
  • The curve is perennially tight; 29s trade through swaps and is likely helped by the 1k/open to retail denominations (exception is the convertible that is 100k).
  • The German Development bank, KFW, reduced it stake to 17% earlier this year. Moody's no longer considers it a government related issuer = lower assumption of gov. support - but still factors it as support for A2 ratings.

No firm view on the curve given the 1k denoms. It looks like it has pre-funded this years upcoming maturity with the €1b 12Y in March but given headroom on BS we wouldn't rule out a revisit. The new line does trade at more reasonable levels and has underperformed; priced at +85 vs +97 now (long-end €IG +7).