Engineering Group - Call Me Maybe? - Model Update

Our updated analysis of Engineering Group takes a closer look at how the proceeds from the divestments to Accenture could reshape the company's capital structure and what this means for bondholders. We have assessed different deleveraging and refinancing scenarios, including the implications of the outstanding notes' call schedules, to identify where the most attractive risk-adjusted opportunities might emerge. But a healthier balance sheet is only part of the equation; we also examine whether Engineering can deliver sustainable free cash flow and profitable growth, particularly as Italian PNRR spending winds down and AI reshapes the competitive landscape. Our analysis suggests that the path to a stronger credit profile may be more nuanced than the headline deleveraging story implies – with some interesting implications for relative value across the capital structure.