TRANSPORTATION: bpost (NR/A-/NR) FV
(51% owned by Belgian state)
WNG €500m 5Y Guidance +95a vs. FV 75 (20bp NIC)
- 25 in from IPT, books>€2.1b are firm
WNG €500m 10Y Guidance +120a vs. FV 100 (20bp NIC) - 30 in from IPT, books>€2.6b
The 5Y has our attention. This is still govvie supported and though profitability is not trending great, European logistics and the acquired Staci will support bottom-line (offsetting declines in NA logistics and falling volumes in core Belgium mail - neither are running losses). BS has historically been low levered and even pro-forma leverage in the net 2.6x handle is not substantially elevated.
With standalone ratings at BBB- and peer curves on those ratings trading 70bps north of guidance, the real downside risk we see is from privatisation/any substantial reduction in current majority stake. The counter to the magnitude of that downside risk is we see bpost standalone fundamentals much better than PostNL and to some extent IDSLN (due to its profitability issues in Royal Mail). IDS is trading flat to PostNL in part on expectation of a leverage bump and supply on eventual refi of £1.25b bridge loan that Daniel Kretinsky/PE may bring with them.
- Standalone BBB-, 3-notch uplift for 51% Belgian state (Aa3/AA/AA- Neg) ownership
- CoC, 3m par call
- UoP is to refi the €1b bridge facility used on acquisition of Staci Group (€1.3b purchase).
- Q3 results come on the 8th of Nov (~1 month).