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TMT In Review

TECHNOLOGY


  • The Comms and Tech indices outperformed €IG by ~0.5bp WoW to yesterday’s close leaving YTD underperformance at 8.4bp/11.8bp.
  • No TMT primary this week with the broader market mostly closed due to earnings.
  • On ratings; Netflix (Baa1/A) was upgraded one-notch by Moody’s and two by S&P with bonds performing strongly in the sessions since. Atos’ sole rating were also downgraded to SD at S&P as they expected on the commencement of its accelerated safeguard proceeding.
  • We saw earnings this week from SAP (credit positive), Comcast (neutral), Verizon (slight neg) Informa (positive), KPN (neutral), AT&T (slight positive), IBM (positive), Universal Music (negative), JCDecaux (positive), RELX (neutral), BT (mixed), VOD (mixed), Vivendi (neutral), Proximus (mixed), Capgemini (negative), Dassault (negative), ITV (slight positive).

  • Warner Bros continued to widen this week in the wake of last week’s FT breakup article and as the NBA rejected Warner Bro’s matching offer; https://marketnews.com/nba-rejects-warner-bros-offer-credit-neg-on-contract-loss-and-potential-litigation.
  • Vivendi’s 28s have rallied by around 1pt and sit at EUR 94 when the group provided an update on plans to split the group (which would likely see the bonds put at par) that included proposed listing locations and a potential Q4 decision date. Q2 results were solid; which would likely see the bonds put at par; https://marketnews.com/vivendi-updates-on-group-split-plans-bonds-muted, https://marketnews.com/vivendi-reports-solid-q2-nothing-new-on-breakup.
  • Universal Music’s bonds sold off as the equity fell by around a quarter on Q2 results that initially looked strong at the headline level but with subscription numbers that threw the longer-term growth prospects of the issuer into question; https://marketnews.com/universal-music-spreads-widen-on-earnings.
  • Informa bonds underperformed, despite a strong Q2 with multiple guidance raises, on the news of a GBP1.2bn cash offer for Ascential that will see leverage move from 1.6x to the upper end of the 1.5-2.5x range, though both S&P and Fitch have indicated that ratings will be unchanged on the expectation that the increase in leverage will be temporary; https://marketnews.com/informa-reports-strong-h1-with-guidance-raise-announces-ascential-cash-offer.
  • Dassault and Teleperformance bonds performed well in the wake of last week’s credit negative guidance update for the former and last week’s AI-driven sell-off for the latter.
  • T-Mobile announced a JV with KKR to acquire Metronet with a USD 4.9bn investment that could see leverage rise from 2.5x to 2.7x against a target of mid-2x though S&P see the move as a credit positive while Fitch confirmed no change in ratings; https://marketnews.com/t-mobile-kkr-to-form-jv-to-acquire-metronet-incl-broadband-infrastructure-operations.

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  • The Comms and Tech indices outperformed €IG by ~0.5bp WoW to yesterday’s close leaving YTD underperformance at 8.4bp/11.8bp.
  • No TMT primary this week with the broader market mostly closed due to earnings.
  • On ratings; Netflix (Baa1/A) was upgraded one-notch by Moody’s and two by S&P with bonds performing strongly in the sessions since. Atos’ sole rating were also downgraded to SD at S&P as they expected on the commencement of its accelerated safeguard proceeding.
  • We saw earnings this week from SAP (credit positive), Comcast (neutral), Verizon (slight neg) Informa (positive), KPN (neutral), AT&T (slight positive), IBM (positive), Universal Music (negative), JCDecaux (positive), RELX (neutral), BT (mixed), VOD (mixed), Vivendi (neutral), Proximus (mixed), Capgemini (negative), Dassault (negative), ITV (slight positive).

  • Warner Bros continued to widen this week in the wake of last week’s FT breakup article and as the NBA rejected Warner Bro’s matching offer; https://marketnews.com/nba-rejects-warner-bros-offer-credit-neg-on-contract-loss-and-potential-litigation.
  • Vivendi’s 28s have rallied by around 1pt and sit at EUR 94 when the group provided an update on plans to split the group (which would likely see the bonds put at par) that included proposed listing locations and a potential Q4 decision date. Q2 results were solid; which would likely see the bonds put at par; https://marketnews.com/vivendi-updates-on-group-split-plans-bonds-muted, https://marketnews.com/vivendi-reports-solid-q2-nothing-new-on-breakup.
  • Universal Music’s bonds sold off as the equity fell by around a quarter on Q2 results that initially looked strong at the headline level but with subscription numbers that threw the longer-term growth prospects of the issuer into question; https://marketnews.com/universal-music-spreads-widen-on-earnings.
  • Informa bonds underperformed, despite a strong Q2 with multiple guidance raises, on the news of a GBP1.2bn cash offer for Ascential that will see leverage move from 1.6x to the upper end of the 1.5-2.5x range, though both S&P and Fitch have indicated that ratings will be unchanged on the expectation that the increase in leverage will be temporary; https://marketnews.com/informa-reports-strong-h1-with-guidance-raise-announces-ascential-cash-offer.
  • Dassault and Teleperformance bonds performed well in the wake of last week’s credit negative guidance update for the former and last week’s AI-driven sell-off for the latter.
  • T-Mobile announced a JV with KKR to acquire Metronet with a USD 4.9bn investment that could see leverage rise from 2.5x to 2.7x against a target of mid-2x though S&P see the move as a credit positive while Fitch confirmed no change in ratings; https://marketnews.com/t-mobile-kkr-to-form-jv-to-acquire-metronet-incl-broadband-infrastructure-operations.

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