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Schneider (A3/A-): Widening on M&A Headlines

CAPITAL GOODS

• An all-cash deal for Bentley Systems (€17bn EV) would take Schneider leverage from around 1x to 3x before any takeover premium.

• While we doubt Schnieder would be that aggressive with their balance sheet, it seems leverage would nonetheless increase meaningfully.

• Schneider has been high triple B rated in the past and if leverage lands with a 2 handle we could see a one notch downgrade, with the agencies allowing time to deleverage from initially high levels.

• € Spreads up to 9 wider at the long end.

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