(Debtwire) House of HR bond yields compensate for risks as neutral cashflow limits downside
30 Jul 2026 | 18:04 BST
Bond yields considered attractive by investors
Neutral free cashflow guided for FY26
Cost savings and positive working capital impact expected
House of HR’s double-digit bond yields are enticing as the company is breaking even on free cashflow and is able to refinance medium-term maturities, according to an analyst, an independent special situations desk and two buysiders.
The Belgium-based human resources services company’s B3/B- rated EUR 415m 9% senior secured 2029s are indicated today (30 July) at 88.5-mid with a 13.5% yield on IHS Markit. The bonds have rallied from 84.5-mid recent lows on 9 July. The company priced the bonds in 2022 at a 92.826 OID and a 10.5% reoffer yield.
The group’s EUR 1.299bn November 2029 loan is today shown at 87-mid on IHS Markit. Meanwhile, the company’s EUR 210m E+ 900bps November 2030 2LTL is indicated at 78-mid on IHS Markit.
“The macroeconomy in 2025 was iffy but if oil falls or interest rate decrease then House of HR bonds can rally,” one buysider said. “There is always the chance Bain Capital puts in EUR 200m equity to pay down the second lien and this can delever the business even if hampers its internal rate of return. There could be an A&E too involving this.”
A second buysider noted 2Q26 results were good and the bonds rallied, adding the company bond prices had been unduly punished with the company having a good product that has a human element. That buysider added the company had a good improvement in margins and they will hold this, noting the bonds can be par eventually unless the company does an opportunistic tender beforehand, but this will be far away.
The company yesterday reported 2Q26 results and held its 2Q26 earnings call. Management noted 2H26 EBITDA margins should be similar to 2H25 with the company focusing on cost savings. Management also added the working capital impact on the full-year should remain positive with neutral free cashflow guided for FY26.
House of HR’s 2Q26 EBITDA was up 3.1% YoY to EUR 83.8m as revenues climbed 0.4% YoY to EUR 881.9m with net fee income falling 0.9% YoY to EUR 224.5m, according to its investor presentation.
“Results were fine,” one analyst said. “But if there is a macro slowdown these businesses have operational leverage and there will be a slowdown in hiring.”
The House of delever question
House of HR has focused on cost management in absolute amounts in recent quarters (see chart below).
Source: House of HR 2Q26 investor presentation
The company reported 4.9x senior secured net leverage and 6.4x total net leverage at 2Q26 based on LTM 2Q26 pro forma adjusted EBITDA of EUR 348.2m, with liquidity including EUR 86.7m of cash and EUR 165m of RCF availability out of its EUR 275m capacity facility. Under the senior facilities agreement, there is an 8.13x senior secured net leverage covenant test that kicks in if the RCF is more than EUR 110m drawn, according to the company’s FY25 annual report.
House of HR was free cashflow negative in FY25. With an FY25 reported IFRS EBITDA of EUR 309.6m, it benefitted from a EUR 52.8m working capital inflow, then faced EUR 32.2m capex, EUR 16.7m cash taxes, EUR 219.6m cash interest, and EUR 94m of leases, which implied rough estimates of a negative EUR 0.1m of free cashflow. The company then spent EUR 101.1m on M&A, had a EUR 0.4m outflow for equity and received EUR 55m of financing, according to its investor presentation.
The second buysider noted the company has a good trajectory and the leverage and free cashflow is not so bad.
“It’s all about whether the economy slows down but the bonds could climb to the 90s if the macroeconomy picks-up and if the company has a EUR 320m EBITDA it can break even on free cashflow,” the first buysider said. “If it gets towards a EUR 370m EBITDA then as volumes pick-up then this will delever nicely and it can do a refi in 2028. The company has got time to address the bonds and you get compensated for the execution risk.”
House of HR could be impacted by upcoming legislation in the Netherlands. The VBAR Employment Relationship Clarification Act is expected to have a limited impact while the WTTA Personal Admission Act should be net positive. The Wet meer zekerheid flexwerkers More Security for Flex Workers Act should have a limited impact. The Nieuwe Uitzend-CAO New Collective Labour Agreement will still mean margins are protected as higher costs will be passed through to customers through higher prices. The Uitzendverbod vleesindustrie ban on agency workers in the meat sector could have an impact but services can be delivered through alternative models to preserve margin.
AI could have an impact on House of HR though demand exposure is limited given 75% of volumes relate to physical work or human-centric roles. AI can also be an opportunity through automation to reduce costs while while also generating new client demand linked to AI implementation. Internally, the company is increasingly using AI to improve operational efficiency.
The first buysider stated there is a 9% coupon on the bond with good liquidity and AI a tailwind. That buysider added the Netherlands also had one legislation that went in the company favour but it now needs a volume pick-up.
“This name is on the cusp and could go either way. The concern is the path to a clean refi is narrow. The company has to grow and this isn't a company that can just turn a factory switch and churn out more cookies,” independent special situations desk Sarria told Debtwire. “The story of reduced costs and AI is believable but it’s an equity story, so it deserves equity pricing, and the bond yields ought to be wide. We like this but it needs to be nervously watched.”
Sponsor Bain Capital has a 50.57% direct stake in House of HR. The company offers two segments. The Engineering & Consulting business recruits highly skilled professionals, with House of HR assisting clients with the selection and search for the right candidates, interim management or secondments. The Specialised Talent Solutions segment offers temporary staffing solutions focusing on “temp-to-perm” placements.
House of HR bond covenants include a number of weaknesses for investors regarding restricted payments and cash leakage, according to a 2023 report from Debtwire sister service Xtract Research.
House of high yield
House of HR bonds offer a compelling yield versus some other European staffing credits, as reported.
Dutch provider of integrated consulting and project delivery, Team EIFFEL, has unrated EUR 250m E+ 575bps senior secured 2030 FRNs indicated at 81.875-mid with a 1261bps discount margin on IHS Markit.
Team EIFFEL’s unrated EUR 250m bonds had been indicated lower amid persistent high leverage, but investors expected sponsor support.
UK-headquartered specialty recruitment and workforce solutions provider NES Fircroft also has a B2/B rated USD 650m 10% senior secured 2031s indicated at 102.125-mid with an 9.4% yield on IHS Markit.
NES Fircroft was taking encouraging steps to diversify away from its oil and gas sector end-market exposure, but a chunky dividend and concentration risks warranted caution, Debtwire reported on 9 July.
House of HR’s bonds offered an enticing yield, with 4Q25 results showing a year-on-year earnings climb, though macroeconomic risks could slow future growth, Debtwire reported on 1 April.
The House of HR 2Q26 capital structure is broken down below (see Debtwire analyst calculations).
Bain Capital declined to comment. House of HR did not respond to a request for comment.
by Adam Samoon and Priyanka Kotadia