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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.
CONSUMER STAPLES
Mgmt may consider issuing well ahead of its front €500m Nov '25 maturity given it's coming off upgrades and solid growth but facing a -30% downturn in EBITDA (for year ending Feb '25). A chunk of the forecasted fall will likely be on Euro sugar prices reversing back in but that is the nature of the raw materials (sugar, wheat, ethanol) exposed name. The 5Y CDS at +65 may be pressured wider if it does.
- Granted the 27s are implying 5Y may price in +80-90 range BUT as we saw in 2022 when it priced its 27s, a steep 3s5s term premium (+120bps then) is possible. Keeping in mind Barry Callebaut - a Cocoa processor that is not as exposed to raw prices given full cost-past through and no farming - issued at +120 last month, we don't think >+100 on new 5Y is a unreasonable expectation.
- It's last issuance was the €400m 5Y/27s in late October 2022. It was coming off very strong results but it may have paid up for weak sentiment; €IG was at 2022 peaks (MS+140 then vs. 75 now). It issued +80 above the index at MS+220 or a 3s5s term premium of +120bps over its 2yr shorter 25s.
- 25s sold-off +25 to +100 (vs. €IG's +8 move) while 5Y CDS moved +30 wider to +160 (vs. Main's -10bp move in); that was over the week from mandate announcement (19th of Oct) to pricing (24th).
- It was Baa3/BBB- Stable (1-notch lower vs. now) BUT it was coming off +67%yoy EBITDA growth and upgraded FY22 guidance that was implying +24%yoy growth. It left implied leverage at gross 2.4x and net 1.8x vs. 2.3x/1.9x we are looking at now on FY24 guidance - i.e. BS is little changed. Only change will be investors directionally looking at sharp fall in earnings.
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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