Obbligazioni societarie HIGH YIELD e oltre, verso frontiere inesplorate - Vol. 1 (7 lettori)
- Creatore Discussione TRADING_IDEAS
- Data di Inizio
- Stato
nik.sala
Money Never Sleeps
iguanito
Forumer storico
Arriva, arriva...un paio di giorni di pazienza
Reuters reports on choice faced by Seat Board
“Buy” PGIM 10.5% 11/17 at 69 or a YTW of 21.3%; “Speculative Buy” LIGHTH 8% 4/14 at 15 or below (currently 15/17)
On Friday, Reuters reported on the choice the Board of Seat currently faces regarding Lighthouse, given the coupon payment due October 31st. The piece accurately reported the back and forth between shareholders and Lighthouse bondholders (where, as we commented, bondholders first proposed a write-down of EUR 1 bn, and shareholders counteroffered a write-down of EUR 1.2 bn out of the EUR 1.3 bn of total par amount). Reuters said bondholders are now contemplating to offer a EUR 1.1 bn write-down, with the rest taken as equity. This would signal that negotiations are on-going and that the gap is narrowing towards an agreement. However, Reuters suggested that the Board is minded to not pay the October coupon if it feels an agreement with the bondholders is not forthcoming. Such a move would trigger a payment default on Lighthouse, with a 30 day grace period, using the Marzano law. This law was enacted on October 27th, 2008 as a response to the Alitalia restructuring to enable the swift debt reorganization of large Italian companies. The process under this law starts with a petition to the Ministry of Economic Development for a special insolvency procedure. Such a move involves a stay of procedures for other creditors and the nomination of an extraordinary officer by the Ministry to manage the assets of the debtor. A restructuring proposal then needs to be submitted within 180 days (with one 90 day extension possible). The Marzano procedure can be extended to include not only the debtor company (i.e. Lighthouse), but also to other group companies. An asset disposal plan can be pursued within two years if the restructuring plan is rejected by the Ministry. In our view, such a process would effectively introduce an arbiter in negotiations (the Ministry) which could have effective powers to break a deadlock by selling assets. The Marzano procedure would allow Seat to continue trading as usual during the restructuring phase. We speculate that the well-timed and well-informed Reuters piece may be a tool to put pressure on Lighthouse bondholders ahead of a key decision by the Board on the coupon. As we have highlighted earlier, we think Seat has the liquidity to pay the October coupon and will do so as long as it feels a negotiated agreement with bondholders is possible. We continue to believe the most likely scenario is for the coupon to be paid, although clearly there is a risk that it is not. In our view, a payment default on Lighthouse in itself would not necessarily trigger a cross default to the senior bonds and bank debt. However, the entering in the Marzano procedure by the wider Seat group, if the company did so petition, would most likely trigger such a default. In any event, we continue to believe recoveries on the senior secured bonds should be strong (in the 90% to 100% range) and hence we maintain our “Buy” recommendation on PGIM 10.5% 11/17 at current prices. We believe the Lighthouse bonds are an attractive speculative play for those that believe the October coupon will be serviced. We maintain our “Very High Risk” assessment on the LARA scale.
“Buy” PGIM 10.5% 11/17 at 69 or a YTW of 21.3%; “Speculative Buy” LIGHTH 8% 4/14 at 15 or below (currently 15/17)
On Friday, Reuters reported on the choice the Board of Seat currently faces regarding Lighthouse, given the coupon payment due October 31st. The piece accurately reported the back and forth between shareholders and Lighthouse bondholders (where, as we commented, bondholders first proposed a write-down of EUR 1 bn, and shareholders counteroffered a write-down of EUR 1.2 bn out of the EUR 1.3 bn of total par amount). Reuters said bondholders are now contemplating to offer a EUR 1.1 bn write-down, with the rest taken as equity. This would signal that negotiations are on-going and that the gap is narrowing towards an agreement. However, Reuters suggested that the Board is minded to not pay the October coupon if it feels an agreement with the bondholders is not forthcoming. Such a move would trigger a payment default on Lighthouse, with a 30 day grace period, using the Marzano law. This law was enacted on October 27th, 2008 as a response to the Alitalia restructuring to enable the swift debt reorganization of large Italian companies. The process under this law starts with a petition to the Ministry of Economic Development for a special insolvency procedure. Such a move involves a stay of procedures for other creditors and the nomination of an extraordinary officer by the Ministry to manage the assets of the debtor. A restructuring proposal then needs to be submitted within 180 days (with one 90 day extension possible). The Marzano procedure can be extended to include not only the debtor company (i.e. Lighthouse), but also to other group companies. An asset disposal plan can be pursued within two years if the restructuring plan is rejected by the Ministry. In our view, such a process would effectively introduce an arbiter in negotiations (the Ministry) which could have effective powers to break a deadlock by selling assets. The Marzano procedure would allow Seat to continue trading as usual during the restructuring phase. We speculate that the well-timed and well-informed Reuters piece may be a tool to put pressure on Lighthouse bondholders ahead of a key decision by the Board on the coupon. As we have highlighted earlier, we think Seat has the liquidity to pay the October coupon and will do so as long as it feels a negotiated agreement with bondholders is possible. We continue to believe the most likely scenario is for the coupon to be paid, although clearly there is a risk that it is not. In our view, a payment default on Lighthouse in itself would not necessarily trigger a cross default to the senior bonds and bank debt. However, the entering in the Marzano procedure by the wider Seat group, if the company did so petition, would most likely trigger such a default. In any event, we continue to believe recoveries on the senior secured bonds should be strong (in the 90% to 100% range) and hence we maintain our “Buy” recommendation on PGIM 10.5% 11/17 at current prices. We believe the Lighthouse bonds are an attractive speculative play for those that believe the October coupon will be serviced. We maintain our “Very High Risk” assessment on the LARA scale.
nik.sala
Money Never Sleeps
Atu
Jyske...
ATU: outperformance and positive sector indicators.
The IFO Automotive Parts and Accessories Index pointed in both August and September to an improvement of the market conditions in Q3 against Q2. This is in line with the company’s own expectations as announced in connection with the presentation of the Q2 results. We still expect ATU to benefit from a robust German economy, although German growth will also be affected by a slowdown in global growth, other things being equal. In Germany, the number of unemployed fell by 26,000 in August (against expectations of a fall of 8,000). At the same time, the unemployment rate fell to 6.9% which is the lowest it has been since 1991. Unemployment has now fallen for two consecutive years and generally the German labour market has been the star performer in the euro zone.
The company’s issues were under vehement pressure in August when €11% 2014 was down by more than 20 points. This was partly due to the very negative market and partly due to disappointing results for the second quarter. At the time, we assessed that the decline was highly exaggerated, which is one of the reasons why the issue has clearly outperformed the market over the last few weeks. The spread of the €11% 2014 issue narrowed by 45 basis points in September while the high-yield market – in the form of Merrill Lynch’s HY index, which has a higher average credit rating, widened by 160 basis points over the same period.
We reiterate our Strong BUY recommendation with a 12-months’ expected return of 28.4%. Read more in the comment which will be available in English shortly.
Jyske...
ATU: outperformance and positive sector indicators.
The IFO Automotive Parts and Accessories Index pointed in both August and September to an improvement of the market conditions in Q3 against Q2. This is in line with the company’s own expectations as announced in connection with the presentation of the Q2 results. We still expect ATU to benefit from a robust German economy, although German growth will also be affected by a slowdown in global growth, other things being equal. In Germany, the number of unemployed fell by 26,000 in August (against expectations of a fall of 8,000). At the same time, the unemployment rate fell to 6.9% which is the lowest it has been since 1991. Unemployment has now fallen for two consecutive years and generally the German labour market has been the star performer in the euro zone.
The company’s issues were under vehement pressure in August when €11% 2014 was down by more than 20 points. This was partly due to the very negative market and partly due to disappointing results for the second quarter. At the time, we assessed that the decline was highly exaggerated, which is one of the reasons why the issue has clearly outperformed the market over the last few weeks. The spread of the €11% 2014 issue narrowed by 45 basis points in September while the high-yield market – in the form of Merrill Lynch’s HY index, which has a higher average credit rating, widened by 160 basis points over the same period.
We reiterate our Strong BUY recommendation with a 12-months’ expected return of 28.4%. Read more in the comment which will be available in English shortly.
bulogna
Forumer storico
tempi tecnici delle banche, se non paga quoterebbe 1
bulogna
Forumer storico
Jyske...
ATU: outperformance and positive sector indicators.
The IFO Automotive Parts and Accessories Index pointed in both August and September to an improvement of the market conditions in Q3 against Q2. This is in line with the company’s own expectations as announced in connection with the presentation of the Q2 results. We still expect ATU to benefit from a robust German economy, although German growth will also be affected by a slowdown in global growth, other things being equal. In Germany, the number of unemployed fell by 26,000 in August (against expectations of a fall of 8,000). At the same time, the unemployment rate fell to 6.9% which is the lowest it has been since 1991. Unemployment has now fallen for two consecutive years and generally the German labour market has been the star performer in the euro zone.
The company’s issues were under vehement pressure in August when €11% 2014 was down by more than 20 points. This was partly due to the very negative market and partly due to disappointing results for the second quarter. At the time, we assessed that the decline was highly exaggerated, which is one of the reasons why the issue has clearly outperformed the market over the last few weeks. The spread of the €11% 2014 issue narrowed by 45 basis points in September while the high-yield market – in the form of Merrill Lynch’s HY index, which has a higher average credit rating, widened by 160 basis points over the same period.
We reiterate our Strong BUY recommendation with a 12-months’ expected return of 28.4%. Read more in the comment which will be available in English shortly.
Questi di jyske sono de men zia li
e i loro buy cominciano a preoccuparmi .......
- Stato