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.
€300m Snr Unsecured Opco 5Y (3m par call) FINAL TERMS 5.75% (eqv. MS+295)
- Books>€850m firmer than >550m at IPT
- Tightened 37.5bps from IPT but at the top end of initial talk for 5-6%.
Background on co from before. It looks like it will price (unlike Otto) and ahead of us giving FV but regardless comments below. Arguably primary performance was better than Auchan's 4Y in April.
It's gone through Auchan's curve which we are okay with given Auchan's uncertainty on core French (52%) business; it's running a 1% EBITDA margin there which has been in free-fall from 3% in 2021. Auchan carries tad higher debt load (post-Casino acquisitions) at S&P adj. 4x (year-end est.). Reminder 1H Auchan earnings are next Thursday (25th) morning - a high beta event.
Elo/Auchan's new 28s (4Y) that priced in April came similarly very wide (5.875%/Z+307) and performed (-20bps) for a short time before moving to issuing levels on French election sell-off. Investors should be weary of the performance there when looking at ITM. Adding to that there may be potential value post-earnings in Elo if 1H results show a recovery (seems unlikely based on S&P's take). Elo benefits from a longer history of having public bonds (reports every half, has a website) and has Xover member CDS (basis has traded very cheap).
It's also through new Ceconomy 29s (NR/BB-) and new Mobilux 30s (B2/B+/BB-). Former is interestingly because it is publicly listed, has analyst coverage, runs 3-4% EBITDA margins (vs. ITM's mid 2s) but is a more discretionary (electronics retailer) that is facing anaemic headline growth. BS is low levered at 1.7x but credit is muddled with its stake in similar goods and French retailer Fnac Darty (29s on the chart). Fnac runs EBTIDA margin in the 6-8% range, publicly listed but again not a staple and 1/5th the size in turnover vs. ITM. At (NR/BB+ Neg/BB+) ratings and lower leverage (targeting net 1.5x by year end), it makes sense for ITM to not have come close to it.
We were leaving FV in-between the two at MS+270 mainly punishing (on fundamentals) the low margins vs. peers and some for leveraging up on Casino store acquisitions. Adding on to that the lack of public reporting (no website) and lack of rating leaves us unable to take a firm cheap view on the name - despite it pricing +25bps north of FV.
All the best to ITM, and we hope it works on it's reporting and returns to public markets.
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.