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Elo/Auchan (ELOFR; NR, BB+ Stable) Levels

CONSUMER STAPLES

Looks bid across the curve for a change; new 28s leading -45bps/+1.5pts.

  • We don't have enough on how a turnaround will be made to have a firm view on the co.
  • Liquidity (re. €685m April 25s) isn't a issue with €1.5b in cash & eqv's (but you will have to face FY24 results).
  • The 170bp pickup from larger French competitor ITM and it's new unrated 29s (which we think has less clarity on reporting) also shows some value. But we struggle to see it as a effective hedge/spread to compress given Auchan seems to be losing market share to it in France (Kantar) - we have no firm view on if ITM will continue to make those gains.
  • CDS against cash (i.e. basis) is also at wider end of historical ranges.
  • No firm view on curve either; 26/27s (1.5s3s) look the steepest at +100bps.
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