Mobico - comment

At last, bonds/perps/equity will be reacting positively on the news, which were originally promised for last quarter and whose lack was one of the primary reasons for reducing our position in the Perps. The statement released this morning does not include any incremental detail on the final agreement and defers us to next month’s annual 15-month statements and call. Meanwhile, challenges at the bus operator are mounting across businesses: in the UK, the pension deficit is larger than expected, Alsa has been losing contracts in Morocco, the Washington situation did not resolve well and, we understand the company is working with Freshfields and Rothschild already. But the resolution to the German problem, even if it doesn’t include a one-off payment, solves the biggest problem and sets up the expected cadence of a UK solution before there would be an approach to the bonds.