February 13, 2025 16:24 GMT
CONSUMER STAPLES: JAB Group; S&P moves to watch negative (x2)
CONSUMER STAPLES
(JABHOL; Baa1 Stable, BBB+ Watch Neg)
JAB levels have always been 'interesting' for carry and somewhat remain that way (ignoring short-end).
The beta from the co does come from its investments performance but also how it manages loan-to-value/LTV ratio - its history in keeping it within the 15-20% target (outside temporary spike during Covid) is a positive.
- We see it facing -$2.5b in mark-to-market losses since it last reported in June (on the ~half it holds in public names). Bulk of that from a -$1.7b swing in Coty (-44%).
- We see that taking LTV from 24% to 26%. 8% sell-down of the portfolio could bring it <20%.
Re. the flag change to US, despite its German origins and headquarters in Luxembourg, its investment exposure is heavily US. Outside the 4 public co's (Coty, JDE Peets, Krispy Kreme, Keuring Dr Pepper), its largest private holdings are in NVA group (Veterinary clinics in the US) and Panera Bread (US and Canada restaurant chain). Recently acquired life insurer was in the US.
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