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Mondi (Baa1/A-) In-Principle Merger Agreement With DS Smith (BBB-): Correction

BASIC INDUSTRIES
  • Our earlier bullet contained bad data.
  • MNDILN spreads have widened ~25bp since the initial bid.
  • SMDSLN spreads rallied hard today on the deal, 8-17bp tighter. There could be another 5-10bp convergence in this.
  • It seems likely the the ratings will meet in the middle around mid triple B. MNDILN spreads look to already cushion a one notch downgrade.

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