Antolin - comment

Both bonds are up this morning by approx. 5 points on the sale of the €110m revenue Indian business for a respectable €159m to Indian automotive manufacturer Shriram, including a long-term tech license and supply agreement back to Antolin to ensure continuation of business. We think the bond movement is a mistake. The cash, together with the proceeds from next year's sale of the Lighting division, will be used to pay down the 28s, so as to remove the springing maturity on the facilities and buy time. The company is doing no better than before, and the entire operation risks leaving the 30s behind. We are still arbitraging the coupon on the two bonds - so far so good, but subject to another call with the company on TLA amortisation, will likely be switching out of that. In terms of YTM, the short-dated (soon half cash-backed) is too wide and the long-dated too tight.