Tapestry (TPR; Baa2/BBB+; double Neg) €27s move tighter than pre-FTC block levels

• The local 27/31s are pushing highs since the FTC block in April on cash px at €103.3/€104.4. That's been paired with step lower in rates over last month and has left spreads LOWER than even pre-FTC block levels (when credit was largely ignoring the risk of a 101 call). 31s also have come in 20bps but still sit 10bps north of March levels.
• The risk reward on fundamentals is a lot worse since then given 1) the formal FTC block 2) fading carry with 3 of the 6-9 months to event risk having passed. Event risk is a estimation of when we may have a outcome from the case. Hearings begin in September, we are currently in pre-trial stages (discovery, witness lists etc.). Compulsory call if deal not closed by 10th Feb but both parties can agree to extend that out.
• Risk/reward on the 27s is now -2.3/+0.7 on cash px (or equivalently said -25bps of upside on close vs. the €101 call on failure). That looks rich standalone but also against the 31s risk/reward at -3.5/+3.5 noting both have similar 5% handle coupon/carry.

On other changes since our last update;

• A skew now to Trump winning in November may not be soon enough to move the FTC or anti-trust crusader & commissioner Lina Khan off the case. Adding to that recent reports point to support for the commissioner even among republicans (referred to as 'Khanservatives') including one of the favoured picks for Trump's VP, J.D. Vance. He was quoted saying "I look at Lina Khan as one of the few people in the Biden administration that I think is doing a pretty good job." (WSJ). Note Khan led FTC has had mixed success in recent past; Judges ruled against the FTC on a Meta & a Microsoft acquisitions.
• We see Capri equities pricing 37% chance of deal closing - firmer than last month - but still far from any confidence on the $57 price tag (+70% upside there for longs).