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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.
CAPITAL GOODS
Rolls Royce (RR/ LN), the aero engine manufacturer, has been one of the best equity performers in last 3 months, operating conditions appear strong but credit still not anticipating ratings action.
- Equity has been a stellar performer post-COVID, having nearly tripled in the last year and risen c.50% since 1-Nov. Same time, the liquid ’25 line has barely tightened at all.
- The equity performance has been driven by good results and higher hours flown by its engines helped by falling oil prices. FCF, at 1H23, was running at nearly GBP2bn p.a., net debt/EBITDA is down to 1.2x (from 5x at 1H21) and absolute net debt is little more than 15months of FCF. Organic deleveraging is happening fast.
- The liquid ’25 line continues to trade at a meaningful premium to its IG cousins in Europe (Leonardo, Safran and MTU, see graphic) and that 1-2 notch discount at RR/ could well close at this rate of deleveraging.
Upcoming results for the peers:
SAF: 15-Feb
RR/ 22-Feb
MTU 29-Feb
LDO 11-Mar
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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