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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.
CONSUMER CYCLICALS
€TPR 31's screen value here (at €102.6/Z+266/5.4%) - pricing to 3-month par-call. The impact for holders on forced redemption will depend on how early it occurs (later/closer to Feb next year is beneficial given carry at 5.875%) - anything before August will leave investors with a net loss. € lines another +6-10bps wider today.
- $TPR lines closed +12bps wider yesterday in line with double-digit sell-off for €27/31s - both markets have pushed it in line with VFC now.
- Benefit is now lower cash prices reduces impact of the 101 forced call (see below) - equity speculators are estimating 40-50% probability of deal not closing NSN SBZLPJDWX2PT <GO> - applying that to current spread levels leaves the 27's screening rich but the 31's are starting to show value here. Note we are comp'ing assuming a 1-notch downgrade to Baa3 on deal closure.
- On timing we'd note Tapestry (acquirer) has showed no signs of losing interest in the deal (yet) despite poor earnings from Capri in interim; CEO in a interview yesterday adding on the EU approval "this is recognition that this is a transaction that is pro-consumer in a market that is highly dynamic and highly competitive".
- That may help extend out timing as co works through regulation hurdles & in turn may help reduce probability of a total return loss on bond holders (we see breakeven for 31's as August) - though we are not taking a firm view on that here.
- Capri equities held flat yesterday in the face of -1.2% market sell-off. Tapestry was down -0.8%.
Initial note from Thursday on lines screening rich; https://marketnews.com/tapestry-tpr-baa2-bbb-doubl...
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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