Tapestry (TPR; Baa2, BBB+; double Neg)

Earnings coming up in US pre-market - we don't see as important unless it has any surprise comments on Capri acquisition - its been confident it can fight off the FTC block thus far - any change to that is bearish to bonds (101 call risk gets priced in more).

• We noted late on Friday that €27/31s looked (very) rich on rising cash prices - that view is unch & as mentioned then we caution investors hedging rates on these lines - px not spreads are the driver of FV here.
• We have a screen cheap on the € Nov 25s (mids €101.35/Z+96) that's valid through BVAL offer side (we are pricing to €101.5)
• Our FV on deal closing includes a downgrade to Baa3 (expected) leaving lines a tad north of PVH (Baa3/BBB-; double pos). We are less concerned with HY rating risk given 25bp/agency coupon step ups on € lines (for S&P & Moody's) to max 200bps.

Background on co; Tapestry is a lux retailer that generates most/75% of sales from Coach , the handbag & leather goods brand. its US heavy (60%) with remaining mostly from China (15%) & Japan (9%). The $8.5b cash acquisition ($57 share price) of Capri (announced August) would nearly double its size (Tapestry sales $6.7b currently) as it brings in Michael Kors ($3.6b in sales), Versace ($1b) & Jimmy Choo ($600m) brands - together its expected to dominate the "accessible luxury" handbag market in US (Capri US focused as well). It prefunded the deal with $4.5b/5-part & €1.5b/3-part deals - special mandatory 101 redemption clause on deal failing the focus for us over last couple of months.