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Saur (SAUR; NR, BBB- Credit Watch Neg, BB+ S)

UTILITIES

Our Util's analyst is absent so no firm view, but our high level thoughts on client Q's;

  • Curve looks tight vs. some Util (& energy) names.
  • Not sure what S&P is waiting for - seems to be quiet optimistic on recovery in WC & margins on cost improvements.
  • BS looks pretty concerning on cash/liquidity & raters seem confident on "eventual recovery" so see no issue on 25/28s staying/holding flat on this sell-off.
  • Company guidance seems v high level/nothing firm; S&P's assuming no debt-funded acquisitions over next 2yrs but has assumed capex at €200m/yr (flat to current levels) which is still sizeable for a co running mid €200m EBTIDA and leaves more pressure on WC improvements to drive cash/deleveraging.
  • On WC Fitch is assuming what mgmt (apparently) said on WC improvements driving net cash impact of +€50m.
  • Positive catalyst (turnaround in earnings) seems not in the near term so we think sell-off has legs.

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