Free Trial

International Distribution Services (IDSLN; NR/BBB Neg/NR)

CONSUMER CYCLICALS
  • EP group using £2.3b of debt (+4x leverage on FY24 EBITDA) to fund the £3.6b takeover looks like tough ask on BS to stay IG rated here (though its confirming that is the intention).
  • IDS currently holds £1.5b in bonds & £1.4b in leases (gross £2.9b) against £900m in cash. Against adj. EBITDA of €500m it left it gross 6x levered, net 4x. Earnings is expected to climb ~70%yoy to consensus £965m - if that does play out, even on EP debt load, leverage will move lower from last yr in gross terms.
  • No disclosure on the form of debt it plans to add, current bonds all Sr unsecured.
  • Natural hedge on screen cheap for 28s (from HY ratings) is adding long 26s given CoC par put (cost of the hedge is a 50bp shaving on 2yr carry).
  • We don't see much need for a hedge. 28s priced in HY ratings already at Z+160. More of a issue for those doubting headline performance/recovery.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.