AMS Osram - All Good Things Come To An End - Model Update - Positioning

All,
Please find our updated analysis on AMS Osram here.

Note: Beta testers can check AMS Osram in the portal here.

AMS Osram has been a very successful investment for us. We first bought the 2025 HY bonds and convertibles in June 2023, before adding the 2029 bonds in May 2024. With the Mar-29 bonds now at 105.5%, we have captured substantial upside and are taking profits as the bonds are call-constrained. We continue to see a strong deleveraging story, but at current prices the remaining upside no longer meets our return targets. This is an exit after a successful investment, not a change in our credit view.

Investment Rationale

We are exiting our position in the AMS Osram € Mar-29 bonds at 105.5%. We have been involved in the name since June 2023, initially buying the 2025 HY bonds and convertibles at 75%, before adding the 2029 bonds in May 2024. The investment has been successful, but yields have tightened substantially, and the bonds are now trading close to their 106.25% call price, leaving limited further upside. This is a valuation-driven exit rather than a change in our credit view.
Further upside would depend on continued execution of asset sales and a strengthening credit profile, but returns are increasingly capped by the call price. The principal risk is therefore technical rather than credit-driven, with any delay to expected transactions potentially weighing on sentiment while the scope for further price appreciation remains limited.
We have also considered a long position in the 2032 bonds, where we see meaningful potential for structural deleveraging as asset sale proceeds and improving cash generation reduce debt. However, with yields already below 7%, inside our target return, we have declined to initiate a position at current levels.