Antolin - comment

Moody’s has downgraded Antolin to CAA1 on raised probability of default. The outlook remains negative. The rating was preceded by a steep sell-off in recent weeks, on the one hand due to the Iranian war darkening an already negative picture of Chinese competition and weakness in European demand, but it will likely require further funds to drop the bonds. We remain long the ‘30s and short the ‘28s as we think the time for any steepening has not yet arrived. The banks have a springing maturity to October ’27 if the ‘28s are not repaid by that time, but until then are incentivised to waive any covenant infringements.