CPI - comment

CPI released its H1 results yesterday, which should leave the bonds broadly unchanged. Reported earnings were weaker due to disposals rather than underlying weakness, with c.€550m of disposals completed YTD at c.5% above book and like-for-like rents up 2.1%. Gross debt fell €159m, while LTV, net debt/EBITDA and net ICR were broadly unchanged at 49.3%, 12.7x and 2.2x, although leverage and interest cover remain above management’s targets.

Liquidity of €1.6bn covers maturities through Q1 28, after €2.3bn of YTD financing has materially reduced refinancing risk. The €149m buyback explains part of the cash shortfall versus our model and is not a credit concern.

Our view is unchanged: bonds inside 6% offer limited upside, while we continue to prefer the 3.75% July 2028 hybrid at c.90 as the more interesting IG-conversion trade.