Walgreens Boots (WBA; Ba2 Stable, BBB- Neg) Boots IPO called off

• Reports late on Friday were IPO shelved and "other options" being explored for Boots including talks with PE buyers. As we said when headlines first emerged last month; "rumours on Boots sale is not new phenomena and has seen nothing eventuate in the past".
• It hasn't issued since 2021, committing to gross paydowns last year and heading forward. We are still weary of the €750m Nov 26s with ~$5b of debt ahead of it including $2b in term loans in '26 and a $1.5 dollar line due June '26.
• €26s trade at Z+110/B+85/4.4%. VFC 26s (IG all neg outlook) gives 50bps above it while Samsonite (B1/BB) is 20bs inside, former we see as tad more value. WBA has consensus FCF recovery (including on controlled pullback on capex) but VF has brand sales (now firmly guided it ~within a year) in its back pocket.
• The £300m Nov 25s screen some value trading at Z+137/T+132/6.1%/€96.5. Its traded as tight as Z+50bps 2 years ago and has shown little signs of "rolling down" into maturity recently - likely not helped by the mere $665m in FCF it generated 12m ending August (while carrying $9.5b of debt ex. operating leases & opioid liabilities). BVAL b/a is 12bps wide, $2b of debt ahead of it and vs. $1.3b and $1.45b consensus FCF expected in FY24/25.

£25s could be some value for those willing to hold to maturity. WBA is tough co to take a firm view on (as evidence by its $12.4b non-cash impairment charge on VillageMD investment in last earnings) with a front-loaded debt, Opioid liabilities (requires annual payments) & a FCF bounce back that is contingent on WC improvements & cut back in Capex.