Intrum - comment

Bonds to move to par, but not far above. Intrum announced a 2-tier rights issue this morning with a combined SEK 7.5bn Guaranteed Raise. Maturities from Sep-27 become an optionality and no longer represent a wall. Intrum's capital raise is fully underwritten and settles early July, subject to a June EGM. SEK 5bn are committed to debt reduction; SEK 2.5bn to DP reacceleration and operational spend.

Day one: SEK 7bn parked in the RCF at 6% = SEK 420m annual cash-interest relief. That alone improves FCCR by half a turn.

Management is planning to decrease leverage 4.6x to 3.0x (Cash EBITDA, of course) by end-2028, subject to which Intrum would pay a dividend. Management did not specify which instruments it would start buying back, but indicated the 1.5 Lien would be in focus before the end of the year, and other decisions would depend on market reaction to the RI and any agency re-rate.

Management is planning on re-investing in Debt Purchases. Current purchasing IRRs stand at a healthy 19%. On that basis, it should still be uncertain if Intrum can grow to depress leverage down to 3x in 2028, but the trajectory should be right.

Bonds are mostly callable in whole or in part one year in advance of maturity.