INEOS Quattro - Positioning

Unconfirmed reports that Ineos Quattro is pursuing both an equity injection and additional inventory financing have prompted a rally across the capital structure. We question both the timing of these rumours and their potential credit impact.

The company already has a securitisation programme of up to $840m, of which approximately $490m was available as at September and was undrawn at 30 September. Any new inventory financing is therefore unlikely to represent incremental liquidity and is more likely to replace existing securitisation capacity. In this context, such a transaction would not enhance liquidity and could, in fact, reduce available headroom.

Similarly, the rationale for the rumoured equity injection is unclear. While an equity contribution could, in theory, support an orderly refinancing of upcoming maturities, it may also serve as a negotiating lever in discussions with creditors or be driven by pressure from other stakeholders, including trade finance providers. Given our view that an orderly refinancing remains unlikely, we believe any equity injection would more likely be associated with credit-negative developments rather than a fundamental improvement in the credit profile.

Therefore, we are taking a 5% short position in INEOS Quattro 2.25% 2027 bonds at 96.75%, on the basis that the 2027 will not get a par refinancing. Happy to discuss.