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InterContinental (IHGLN; Baa2/BBB) FV

CONSUMER CYCLICALS
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€Bmrk 7Y IPT MS+165/170 vs. FV +128 (-37)

  • CoC, 3m par call
  • The shorter Accor 31s priced in March at +125 and now +124. We have spread FV relatively flat to it for the 6-month extension and 1-notch higher rating. Sterling Accor's swapped over included (light green).
  • No firm view on the hotel managers but please note the decompression potential from current tights (27s were +380 over swaps post-covid and in 2022 widened to +220 over swaps). Both will be happy with running leverage here (BBB/mid-to-high 2x corridor) and instead turn to equity pay-outs. We see move value in high-grade airlines; IAG (Baa3/BBB- Pos) gives 40bp pickup over both around the 4Y.


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€Bmrk 7Y IPT MS+165/170 vs. FV +128 (-37)

  • CoC, 3m par call
  • The shorter Accor 31s priced in March at +125 and now +124. We have spread FV relatively flat to it for the 6-month extension and 1-notch higher rating. Sterling Accor's swapped over included (light green).
  • No firm view on the hotel managers but please note the decompression potential from current tights (27s were +380 over swaps post-covid and in 2022 widened to +220 over swaps). Both will be happy with running leverage here (BBB/mid-to-high 2x corridor) and instead turn to equity pay-outs. We see move value in high-grade airlines; IAG (Baa3/BBB- Pos) gives 40bp pickup over both around the 4Y.


Keep reading...Show less