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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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- The WPP (Baa2/BBB) term structure is a lot steeper than comparable peer curves with short-dated spreads streaming tighter/in-line with the EUR BBB Comms curve while their longest dated 2033s sits ~ 45bps wide of it.
- We feel the short-end of the curve trades too tight to higher rated peers for the underlying credit narrative – CSPP is one reason we’ve seen cited for the tightness which makes sense with the 26s/27s/28s all on the ECB’s holdings list.
- WPP has faced a steady deterioration in underlying credit quality – WPP downgraded FY23 guidance twice last year and FY24 consensus puts expectations at the lower end of the guidance range. In the FY23 earnings call management noted that client losses would weigh on H124 (with outright contraction in Q1) which we feel raises the prospect of more misses this year.
- Leverage has moved above the 1.5-1.75x target range to 1.83x with management expecting a flat FY24. With leverage ratios that were already tight vs. rating thresholds, adverse changes in outlook seem possible.
- The time series below shows underperformance of the WPP 30s vs. the 2030/2031 bonds of similarly rated media names presented in the RV chart; namely Bertelsmann, OMC, Publicis & JC Decaux.
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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