CONSUMER STAPLES: Walgreen Boots; updates ahead of earnings
{WBA: BB- Stable/B1 Stable)
No updates on takeover interests but equities that were +18% on initial rumours Sycamore (PE) may be looking at it are now only +7%. Short-end is holding onto the gains; €26s -90bps from pre-rumour, £25s -45 while $ long-end including the $44s that moved +8pts initially have fully reversed (even before S&P downgrade) - retail denoms and $70-handle cash px not enough to support it. New $29s that gave a sizeable 100bp NIC in August are now trading below par.
S&P came with a 1-notch downgrade and stabilised the outlook on the 31st, but with not much good to say on near-term prospects. That is somewhat in line with company's lacklustre - but stable - FY25 guidance. S&P edged in a total 3-notches of downgrades in 2024 (BBB- to BB-).
Reminder 101 CoC will require both raters to downgrade it by at least another notch. Removing the chance of the +3.8pts upside on CoC for €26s, Wizz 26s (Z+170) may screen the better alternative for carry here.
1Q earnings (3m to Nov) come this Friday (10th).