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ERFFP Snr mids 3-8bps tighter - best performing IG corps today

HEALTHCARE
  • Does seem curve specific bid - BAYNGR/VTRS only 1-3bps tighter.
  • As we mentioned after earnings, only issue was extent of expansion capex & separately disclosed items (SDI's) on FCF conversion ratios (needs to stay above 20% to net debt).
  • Guidance did seem to be in line with the circa €200m Moody's was looking for (net of capex), but still Eurofins reporting on cash flows we find is far from clear cut.
  • Dividend cut to stay in line with 25-30% pay-out ratio, unch leverage targets & mgmt continuing to emphasis '27 targets for FCFF before investment in owned sites of €1.5b (from ~€600m last yr) should keep Moody's satisfied with IG rating for now.

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