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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.
CONSUMER CYCLICALS
€500m 5.5NC2 Sr Secured PRICE-TALK 4.25-4.375%a (eqv. OAS+177-190) vs FV 4.15% (eqv. OAS+165) (10bps NIC)
- CoC at 101
- Will be issued out of the IGT Lottery (business that was not sold to Apollo) but Guarantor includes IGT PLC (in-case the spin-off of gaming fails ranks pari passu to all other debt under IGT).
- No net supply/leverage neutral - it will pull the $500m {EK730372 Corp} at par.
- So it has confirmed what S&P already told us; of the $4.05b it will receive from Apollo for selling its Gaming side, ~$2b will go to debt paydowns with "significant part" of the rest to go to equity holders. It will move leverage from net 2.9x to 2.6x.
- Reminder yesterday S&P stayed unch on CW pos. - as expected it is waiting for the sale to close (company sees in 3Q25). 1-notch upgrade very likely, 2-notches was contingent on the cap. allocation policy.
- Co has in the roadshow committed to <3x across the cycle. S&P need it's adj. leverage <3x - we see it adj. +0.2x above co's reported - we think IGT can work out the small difference and takeaway for us is we can price to firm IG ratings.
IGT Lottery (the business you will be left with);
- $2.5b in revenue running just shy of 50% EBTIDA margins and 30% EBIT margins. 50% from US (it says 77% market share in Lottery there), 38% in Italy (says no. 1 operator in country) and 12% from RoW.
- 55% are from instant lottery tickets, 40% from draw games and 6% from jackpots. 95% is service revenue, only 5% in product sales. Contracts are awarded through bidding process and generally last 5-10years.
- Italy has struggled to grow over the last decade, market growth has been lacklustre (LSD) as well.
- Growth area seems to be in iLottery (fuelled by pandemic) and it sems focused on growing solutions/services it can provide there; it is CAGR'ing 83.9% from 2019 - well above reported market growth.
- 2Q results (to June) were lacklustre for lottery side with sales -2% and EBIT -7%; guidance was withdrawn given pending sale but it said 2H lottery conditions would be better and be up YoY.
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.
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