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Reckitt (RKTLN; A3 Pos, A-) sell-off

CONSUMER STAPLES
  • Rough close for the staple conglomerate, € lines +6-12 wider, £ unch to 13 wider. On spreads against comps its still in vs. initial NEC blow-up wides (see below). We didn't have a cheap view on the new €29s that priced with a 7bp NIC and we still don't see secondary screaming value.
  • For investors looking to rotate out of Reckitt, Haleon (HLNLN; Baa1 Pos, BBB+), another consumer staple and parent of Sensodyne & Pandol should be eyed. Similar scale co's as well; Haleon £11.5b in revenues, Reckitt £14.6b.
  • Haleon's coming off deleveraging led upgrades (after its demerger from GSK) and has given guidance for org +4-6% growth this year. Not a cheap view of ours but we see no need for investors to stay/head into Reckitt when spread pickup on the 30s is +16bps.
  • Re. sterling, again XCCY into euros below (dark shade is € lines, light £). Looks fine/in-line but again staple alternatives is there with McDonalds (Baa1/BBB+) giving up little to no spread.

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  • Rough close for the staple conglomerate, € lines +6-12 wider, £ unch to 13 wider. On spreads against comps its still in vs. initial NEC blow-up wides (see below). We didn't have a cheap view on the new €29s that priced with a 7bp NIC and we still don't see secondary screaming value.
  • For investors looking to rotate out of Reckitt, Haleon (HLNLN; Baa1 Pos, BBB+), another consumer staple and parent of Sensodyne & Pandol should be eyed. Similar scale co's as well; Haleon £11.5b in revenues, Reckitt £14.6b.
  • Haleon's coming off deleveraging led upgrades (after its demerger from GSK) and has given guidance for org +4-6% growth this year. Not a cheap view of ours but we see no need for investors to stay/head into Reckitt when spread pickup on the 30s is +16bps.
  • Re. sterling, again XCCY into euros below (dark shade is € lines, light £). Looks fine/in-line but again staple alternatives is there with McDonalds (Baa1/BBB+) giving up little to no spread.