Obbligazioni societarie HIGH YIELD e oltre, verso frontiere inesplorate - Vol. 1
- Creatore Discussione TRADING_IDEAS
- Data di Inizio
- Stato
qquebec
Super Moderator
qquebec
Super Moderator
(OT) - Khol si sentiva preoccupato per la riunificazione della Germania: temeva un terzo conflitto mondiale. E non aveva torto
iguanito
Forumer storico
Ciao Nick! siamo arrivati al 40% di rimborso e tra 10 gg ne avremo un altro 10%. Chiaro che le vicende argentine influiranno anche sul corso di questi bond anche se non credo che a questo punto ci saranno sorprese. Certo che se l'argentina finisse i soldi anche questi.......
montecarlo
Nuovo forumer
ciao qquebec....mi sembra che i bond cliff siano stati massacrati un po troppo....sono comunque stati downgradati a BA1 (non così male direi) da Moodys ad inizio settembre e sono ancora (magari per poco ) BBB per S&P....ok il mercato in cui opera è difficile ma a questi livelli possono essere una scommessa interessante
londonwhale
Forumer storico
Stavo scorrendo una lista di HY, qualcuno conosce Unilab Subholdings? XS0943769470
in attesa dell'accesso al loro sito, inizio a leggermi i report di Moody's
https://www.moodys.com/research/Moodys-changes-outlook-on-Unilabs-B3-CFR-to-negative-from--PR_307588
https://www.moodys.com/research/Moodys-assigns-B3-CFR-to-Unilabs-outlook-stable--PR_274796
in attesa dell'accesso al loro sito, inizio a leggermi i report di Moody's
https://www.moodys.com/research/Moodys-changes-outlook-on-Unilabs-B3-CFR-to-negative-from--PR_307588
https://www.moodys.com/research/Moodys-assigns-B3-CFR-to-Unilabs-outlook-stable--PR_274796
zoro-aster
Forumer storico
ne sono convinto, io scommisi da mesi ora stò alla finestra pronto ad incrementare se vanno ancora giù
whitesoul9
Forumer storico
Edcon
Edcon’s capital structure questioned – again
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Bonds collapse as a result
South African retailer Edcon is battling to convince markets that its business and capital structure is sustainable in the long term.
This is after two firms issued negative reports on Edcon’s capital structure within days of one another.
Last week global investmentment firm Morgan Stanley issued a negative report titled The Capital Structure is Unsustainable, and advised investors to take a short position on its Euro denominated debt, which is listed on the Irish Stock Exchange.
As a result investors on the 13.375% bonds, which mature in 2019, were rattled. The bonds, which were trading at around 63.5 before the note was published, plummeted to a bid of less than 47, according to Reuters. They are now trading at around 40.
The senior secured bonds were less affected, with the €317m 9.5% 2018 bonds bid at 86.5 compared to 91.2 at the start of the week, the news agency said.
To make matters worse, this week global ratings agency Standard & Poors (S&P) downgraded Edcon’s corporate debt from B- to CCC+ arguing that its top line and profitability were under pressure from declining credit sales. “Edcon is burdened by substantial debt and we view its capital structure as unsustainable,” S&P said.
This news follows closely on the heels of another setback: with credit retail sales falling as a result of credit provider Absa’s tighter lending criteria, Edcon was in discussion with African Bank to become its second look provider. With African Bank in business rescue Edcon is now in feverish discussions with other banks to step into the gap.
Essentially the Morgan Stanley research report intimated that Edcon is fast running out of runway and has no choice but to restructure its capital in the next 12 months.
This has shaken European high-yield buyers who have been particularly skittish about potential distressed credits after UK retailer Phones 4U fell into administration earlier this month, according to the Reuters report.
However, unlike African Bank or Phones 4U, Edcon is profitable and has sufficient cash flow to meet its commitments.
S&P in its downgrade report acknowledges the liquidity: “The stable outlook reflects our view that Edcon's short-term liquidity is well covered and supported by its available revolving credit facility, adequate covenant headroom, and no material short-term debt maturities.”
Morgan Stanley’s analysis of Edcon’s numbers is possibly inaccurate. The investment firm has based its analysis on “last 12 month analysis”, which means the figures will not reflect the improvements in a business that is in the early stages of a turnaround.
According to Edcon’s latest report, for the first three months to June, the numbers have improved on several fronts. Retail sales are up; cash flow is improving as capital expenditure falls. Capex will drop from R1.3 billion invested in the 2014 financial year to R750 million in 2016; working capital has improved as a result of improvements in inventory and trade payables management; staff rationalisation and other cut backs will yield savings.
In addition, in June Edcon sold its Namibian trade receivable book to Absa for R314 million, which also becomes a source of cash flow.
In its first quarter results to June the company reported retail sales up 5.7% and cash sales up 15.1%, however adjusted ebitda fell by 6.6% to R679 million off revenue of R6.6 billion, as a result of a lower gross profit margin and higher store costs.
Edcon is not immediately impacted by the price of the bonds or the ratings downgrade. Its next big refinance is 2017.
But bondholders will not be happy. According to Reuters, Edcon printed the punchy €425m 5.5-year non-call 1.5 senior notes in November last year at par to yield a whopping 13.375%, giving it the dubious honour of the highest cash-coupon of any bond issued in Europe's high-yield market.
Edcon's private equity owner Bain Capital was willing to pay these sky-high yields as the new debt was structured as a possible bridge to an IPO. In January the bonds traded as high as 107 as confidence in a listing gathered.
However lacklustre economic growth, high consumer indebtedness and falling credit sales has delayed Edcon’s turnaround, and with it any plans for a listing.
The value of the notes began to fall as investors digested this reality.
For Edcon now the priority is to see this financial year through to March. Last year was a particularly disruptive year and the group will want a year of ‘normal’ trading behind them to demonstrate progress to the market.
It’s unlikely that Bain Capital is out of options when it comes to its capital structure. What is true though, is the stickiness of the debt is limiting the options.
At the end of June, the end of Edcon’s first quarter last year, net debt sat at R19.5 billion and had risen to R22.6 billion by June 2014.
Edcon’s capital structure questioned – again
Article tools
Print PRINT ARTICLE
Send SEND TO FRIEND
Subscribe to newsletters SUBSCRIBE TO NEWSLETTERS
Feeds FEEDS
Bonds collapse as a result
South African retailer Edcon is battling to convince markets that its business and capital structure is sustainable in the long term.
This is after two firms issued negative reports on Edcon’s capital structure within days of one another.
Last week global investmentment firm Morgan Stanley issued a negative report titled The Capital Structure is Unsustainable, and advised investors to take a short position on its Euro denominated debt, which is listed on the Irish Stock Exchange.
As a result investors on the 13.375% bonds, which mature in 2019, were rattled. The bonds, which were trading at around 63.5 before the note was published, plummeted to a bid of less than 47, according to Reuters. They are now trading at around 40.
The senior secured bonds were less affected, with the €317m 9.5% 2018 bonds bid at 86.5 compared to 91.2 at the start of the week, the news agency said.
To make matters worse, this week global ratings agency Standard & Poors (S&P) downgraded Edcon’s corporate debt from B- to CCC+ arguing that its top line and profitability were under pressure from declining credit sales. “Edcon is burdened by substantial debt and we view its capital structure as unsustainable,” S&P said.
This news follows closely on the heels of another setback: with credit retail sales falling as a result of credit provider Absa’s tighter lending criteria, Edcon was in discussion with African Bank to become its second look provider. With African Bank in business rescue Edcon is now in feverish discussions with other banks to step into the gap.
Essentially the Morgan Stanley research report intimated that Edcon is fast running out of runway and has no choice but to restructure its capital in the next 12 months.
This has shaken European high-yield buyers who have been particularly skittish about potential distressed credits after UK retailer Phones 4U fell into administration earlier this month, according to the Reuters report.
However, unlike African Bank or Phones 4U, Edcon is profitable and has sufficient cash flow to meet its commitments.
S&P in its downgrade report acknowledges the liquidity: “The stable outlook reflects our view that Edcon's short-term liquidity is well covered and supported by its available revolving credit facility, adequate covenant headroom, and no material short-term debt maturities.”
Morgan Stanley’s analysis of Edcon’s numbers is possibly inaccurate. The investment firm has based its analysis on “last 12 month analysis”, which means the figures will not reflect the improvements in a business that is in the early stages of a turnaround.
According to Edcon’s latest report, for the first three months to June, the numbers have improved on several fronts. Retail sales are up; cash flow is improving as capital expenditure falls. Capex will drop from R1.3 billion invested in the 2014 financial year to R750 million in 2016; working capital has improved as a result of improvements in inventory and trade payables management; staff rationalisation and other cut backs will yield savings.
In addition, in June Edcon sold its Namibian trade receivable book to Absa for R314 million, which also becomes a source of cash flow.
In its first quarter results to June the company reported retail sales up 5.7% and cash sales up 15.1%, however adjusted ebitda fell by 6.6% to R679 million off revenue of R6.6 billion, as a result of a lower gross profit margin and higher store costs.
Edcon is not immediately impacted by the price of the bonds or the ratings downgrade. Its next big refinance is 2017.
But bondholders will not be happy. According to Reuters, Edcon printed the punchy €425m 5.5-year non-call 1.5 senior notes in November last year at par to yield a whopping 13.375%, giving it the dubious honour of the highest cash-coupon of any bond issued in Europe's high-yield market.
Edcon's private equity owner Bain Capital was willing to pay these sky-high yields as the new debt was structured as a possible bridge to an IPO. In January the bonds traded as high as 107 as confidence in a listing gathered.
However lacklustre economic growth, high consumer indebtedness and falling credit sales has delayed Edcon’s turnaround, and with it any plans for a listing.
The value of the notes began to fall as investors digested this reality.
For Edcon now the priority is to see this financial year through to March. Last year was a particularly disruptive year and the group will want a year of ‘normal’ trading behind them to demonstrate progress to the market.
It’s unlikely that Bain Capital is out of options when it comes to its capital structure. What is true though, is the stickiness of the debt is limiting the options.
At the end of June, the end of Edcon’s first quarter last year, net debt sat at R19.5 billion and had risen to R22.6 billion by June 2014.
fabriziof
Forumer storico
Se qualcuno trova il rationale di s&p fa cosa gradita
SAFEWAY INC. 2031 US786514BA67 USD 1'000 7,25%
SAFEWAY INC. 2027 US786514AS84 USD 1'000 ?? ( non son sicuro) 7,45% ad oggi illiquida sui 103-104
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