LevFin Wrap

Quattro formaggi - Styrolution, Inovyn, Aromatics and Acetyls come Together as investor feedstock


By Huw Simpson | huw@9fin.com

A quintet of new deals came as music to the ears of investors starved by last week’s muted display. A healthy mixture of crossover credits, homegrown Sterling and mega M&A transactions offered plenty to choose from across the credit spectrum.

Crossover Compatriots outpace Conte Crisis

Squeezing ahead of the probable implosion of Italy’s government, Telecom Italiaannounced on Monday the offering of its inaugural Sustainability Bond (Ba2/BB+/BB+). The eight-year, €1bn Senior Notes are to be issued under the group’s existing EMTN programme, and will fund improved energy efficiency through the transformation of its existing copper network into fibre. Weighty demand built the book to north of €4bn on the intra day transaction, driving the final coupon to its lowest ever at 1.625% - yielding 1.75% on a 99.074 OID.

Charting: Telecom Italia instrument performance from 2020

Next up, Autostrade per L’Italia - the motorway concessionaire subsidiary of Atlantia - offered benchmark Reg S Senior Notes due 2030 on guidance of mid-swaps + 250 bps (Ba3/BB-/BB+). Investors rolled out again, and as the books built in excess of €2bn the size was set at €1bn, matching the Telco countryman. Spreads compressed just 15 bps for the coupon to settle at 2.00%, on a re-offer of 99.099 to yield  2.11%. An Atlantia demerger approved in December was put to, and today agreed by shareholders representing 99.7% of the share capital present at the meeting (15-Jan).

The plan comes as Atlantia looks to move away from its chequered past. At present, tragedy looms over the company after the 2018 Morandi Bridge collapse in Genoa killed 43 people. In Nov-20, the former chief executive and other top managers were placed under house arrest, and the fallout continues, with a broader investigation still ongoing.

Sterling Opener

Together, the UK-based specialist mortgage and secured loan provider, re-opened GBP HY midweek, offering £450m in Senior Secured Notes due 2027 (BB-/BB-). Proceeds from the new notes will redeem £350m of existing SSNs due 2024, and reduce amounts outstanding under the Charles Street conduit Securitization. Pricing arrived on Thursday at 5.25%, easing through IPTs of 5.50-5.75%, and even upsizing £50m, with additional proceeds for general corporate purposes. 

Covenants - which are substantially similar to the existing 2026s - contain few surprises, although we note the restricted payments CNI Builder basket is backdated to 2013, with no estimate provided for the built up capacity.

Also on Wednesday, Swedish home alarms group Verisure launched the bond leg of its refinancing and fund-to-fund dividend recap. Spread across three tranches, the €2.4bn financing includes €1,150m of Senior Secured Notes due 2027 (B1/B), €1,270m Senior Notes due 2029, and a smaller SEK 1,500m Senior FRN tranche due 2029 (Caa1/CCC+). IPTs on the EURs of 3.50-3.75% and 5.50-5.75% came in 25 bps for price talk on Thursday, with the SEKs at S+575-600 bps.

Final terms landed at the tight end of price talk across all tranches, with the 6NC2 SSNs offering 3.25%, 8NC3 SNs 5.25%, and the FRNs S+575. A c. €53m upsize may be used to fund an additional distribution to shareholders.

While implied equity on its previous transaction EV multiple of 11.6x EBITDA in 2015 would give a 40% cushion, the generously self-determined value of (at least) €14bn provides a more deadbolt 52%. The deal also includes several sponsor-friendly additionsover the existing Notes, not least a restricted payments (RP) capacity which can be used to secure debt (similar to ‘Available RP Capacity’ concept), new permitted investment baskets including leverage based flexibility, and a CNI builder basket backdated and floored with €330m day one capacity.

Mirroring Verisure’s consent-loan-bond route, Ineos Quattro launched the bond portion of its €4.6bn mega M&A and refinancing play. A €1bn (equiv.) 5Y Senior Secured tranchewas marketed across Dollars and Euros (IPTs 4.00% area, and 3.00-3.25% respectively), to be matched with an equal size 5.5Y Unsecured tranche (Dollars and Euros, Low 5s / Mid 4s). The roadshow will run through to Wednesday (20-Jan), with pricing thereafter.

The upshot of a non-existent New Issue Premium and a drive through fair value on most of this year’s issuance can be seen in price changes versus their reoffer. In most cases it’s bad news. Adler Group’s 2026s were seen earlier today -0.80 pts, with the 2029s -1.20 pts. Telecom Italia 2029s are down -0.20 pts, and Together 2027s -0.25 pts. Autostrade 2028s - which failed to tighten as aggressively in bookbuild - shows the only positive change, up around +2 pts versus reoffer.

Serie A BC Shootout

Italian Serie A football club Inter Milan is reportedly up for sale, with BC Partners out front as the home favourite - EQT and Arctos Sports Partners have also registered interest. Majority owned by Chinese conglomerate Suning Holdings, the FT suggests a club valuation of up €900m. 

The news was perhaps then a surprise, coming as it did, just days after group president and 29 year old son of Suning billionaire founder Steven Zhang scorned sale rumours (02-Jan), ‘categorically’ denying the ‘false claims’ as ‘entirely baseless’.

Elsewhere, on Thursday afternoon AA shareholders approved a £2.8bn takeover by TowerBrook Capital and Warburg Pincus, offering 35p a share. The group has suffered under a substantial debt burden for years, and the promised injection of new funds will - in the apt words of the consortium - provide “the operational freedom to drive the business forward”.

McLaren announced today (15-Jan) that Paul Buddin was stepping down as CFO ‘by mutual agreement’ after 3 years in the role. Buddin helped in the raising of the group’s inaugural £560m bond, as part of the union of McLaren Automotive with McLaren Technology Group in 2017. It comes days after news that the £190m sale and leaseback deal on the F1 headquarters is said to have collapsed on a failure to secure banking finance.

Today, we also published a report into the changing nature of working capital dynamics, using recent Q3 numbers which saw an average 1.8 days reduction in the cash conversion cycle of European HY as firms search for liquidity.


Secondary returned to the black this week, ushering in a small +0.14 pt gain (46% +0.68 pts | 50% -0.34 pts). It was more of the same by Industry, with Energy (+0.54 pts), Financials (+0.37 pts) and Industrials (+0.34 pts) continuing to retake ground lost throughout 2020. Going into reverse, Communication Services (-0.02 pts), IT (-0.04 pts) and Consumer Staples (-0.05 pts) tracked the worst performance, albeit mostly flat.

The iTraxx Europe Crossover was quoted at +254 bps on Friday, widening slightly from +246 bps seen this time last week.

And lastly, while the market comes to terms with Europcar’s CDS payout failure, other car rental peers have seen less encouraging returns on their underlying. Hertz, itself in the midst of a complex restructuring, had its 2021s and 2023s each trade off 5-6 pts. Avis Budget2024s also slumped nearly -2 pts, with the 2025s and 2027s dropping around a point each.