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Dufry (now Avolta) (DUFNSW; Ba2, BB; S) {AVOL SW Equity}

CONSUMER CYCLICALS

Pricing looks like its giving a ~25bp NIC - flagging ahead of Elo/Auchan FV - both BB rated retailers.


Some differences to note vs. Elo (& explains some of the tightness in Avolta secondary)

  • It is predominantly a airport store retailer & hence riding a travel recovery with also firm medium term outlook of +5-7% in organic growth
  • No net supply on this deal; it has a tender out on the €24's till next week
  • Its coming off double upgrades (now stable) & is still targeting deleveraging (2.6* now vs. 1.5-2* target)
  • Public equity, strong analyst coverage (who are in-line with mgmt guidance expecting strong organic rev growth) & double rated

As a aside, the newly issued (& unrated) BEL 29's have moved through the Avolta curve (which was our floor on pricing) - mids currently at MS+146/€100.7 vs pricing at +175/€99.7. As we mentioned before, given less clarity on unrated BEL we prefer Avolta on net balance of risks. BEL did price & still does trade wide of (company reported) fundamentals - on those it's more in line low IG rating (low 100's on spread)

Thoughts on Elo/Auchan to follow.

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