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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.
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- Telia’s equity is the worst performing of any €IG issuer this morning at -9%. EUR spreads remain muted, less than a bp of widening across their senior EUR lines, hybrids are +3-5bps.
- We still see the report as credit neutral; despite lower revenues the adj-EBITDA YoY is encouraging despite another negative contribution from the TV business, a segment that may be set for a turnaround in the wake of last year’s restructuring with pay TV revenues increasingly offsetting the weak advertising exposure (disposal remains an alternative option should the turnaround run out of steam).
- Slightly higher leverage isn’t a concern as it will be offset by the reduction in debt planned for the Danish exit proceeds with leverage falling to 2.2x by our calculation against the 2-2.5x target.
- Equity seems to be paying particular attention to FCF though we note the impact of the pension refunding seems to be equivalent to half the YoY structural FCF decrease. This won’t likely be a repeating factor and management expect cash gen to pick up in H2 with ~70% of the pickup in interest costs having come in Q1 while WC contributions are also expected.
- Since the March tender the Telia short end now trades inside that of peers Orange and Telenor though the long end has moved inside too over the past few weeks.
- We like the Telia credit though these levels do look stretched with the 2.125% 34s (not a tendered line) particularly tight given the higher rating at Telenor and the fact that Orange seems closer to an upgrade while also benefitting from inclusion in CSPP.
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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