SARRIA - Credit Opportunities

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OHLA - Building the new order

Please find our unchanged analysis here.

OHLA is once again on the naughty step with the Spanish competition authority (CNMC), albeit in the company of its domestic competitors. Whilst a fine is never pleasant, the health of the domestic and foreign construction market is more important for OHLA's wellbeing. Inflation and raw material availability continue to hurt construction activity, but that needs to be viewed alongside raised government spending plans and emerging political will to assist the industry in addressing costs. Whilst waiting for both shoes to drop, the challenge for management is defending cash and building up the order book.

Aengus McMahon8 July 2022OHL, OHLA

Germany and the EU grapple with Natural Gas Prices - comment

Natural gas suppliers have been seen as marvellously dull and ideal assets for a bond investor, driven by fees and regulated return on infrastructure. The Ukraine war has turned natural gas into a strategic industry as prices have risen. Recent economic news from Germany points to an increasingly

Aengus McMahon6 July 2022GENERAL

German Real Estate - comment

BNP Paribas have published their half-year review of the German market and it’s very interesting. While large swathes of debt are trading in the 50s and equities are trading

Wolfgang Felix6 July 2022ADLER, ACCENTRO, AGGREGATE, VIVION

Orpea - comment

Orpea drew down a further €650m of their new debt as part of the rescue financing arranged earlier this year. These new facilities ensure the viability of

Tomás Mannion5 July 2022ORPEA

Aggregate - Of Clubs, Ghosts and Fire Birds

Please find our unchanged analysis here .

Some two weeks ago, Rolf Buch, CEO of Vonovia was seen in the China Club in Berlin. As German RE is largely carved up between the members of that club and observing the deluge of deals since then, we have the distinct impression that some deal went down in those days that broadly fits the narrative we have been discussing for some time now, even if we are not sure about this detail or if we are merely seeing ghosts - probably. But even if that’s all idle speculation, it's the absence of certain other news combined with today’s courageous press release that has us going back to the Phoenix.

Wolfgang Felix4 July 2022AGGREGATE

Accentro - comment

We are primarily concerned with how Accentro proposes to manage its refinancing requirement in the next two quarters. Accentro, on the other hand, continues buying stressed assets in undisclosed cities in eastern Germany. Our analysis leaves us convinced that the

Aengus McMahon4 July 2022ACCENTRO

Aston Martin: Turn on the fog lights.

Please find our largely unchanged analysis here.

In simple terms, someone offering to inject £200m of fresh cash behind the bonds is good news for the bonds. But is it so easy? The timing of the recent FT article is curious and had us revisit our model and in particular our assumptions on volumes and strategy. While the company itself has not yet offered any specific insight, we have more than a few ideas as to what AML may want/need to spend further money on. From the bond’s perspective, the main distinction here has to do with what is required and what is extra.

Wolfgang Felix3 July 2022ASTON MARTIN

Frigoglass - Never? Or Now?

Please find our updated analysis here.

So far so good. Advisors are in place, some Romanian operations reduce the risk from Q4, insurance companies have been reasonable (so far) and the Russian borders are still open (so far). Never mind inflation. With the bonds in the 50s and events unfolding, what are the risks and rewards now? What are the scenarios and when we put it all together, do the bonds have a place in our portfolio?

Wolfgang Felix3 July 2022FRIGOGLASS

Casino - comment

Casino used some of its segregated Secured cash to purchase and cancel its bonds. This isn’t sensational as Casino has some headroom under its Gross Senior Secured covenant, however,

Tomás Mannion1 July 2022CASINO

CGG - comment

The impact of changes in investment budgets is starting to show up in order books. Petrobras has extended the contract with CGG for a dedicated service centre in Brazil by four years. The extension provides CGG with certainty around revenues in

Aengus McMahon1 July 2022CGG

KCA Deutag - comment

KCA reported their Q1 numbers yesterday but that doesn’t tell half of the story. Although slightly lower than our expectations, the business continues to

Tomás Mannion30 June 2022KCA Deutag

Adler - comment

While we are eyeing the next version of our Adler analysis, ADJ is liquidating parts of its highly sought after Berlin portfolio. The latest

Wolfgang Felix30 June 2022ADLER

Casino - comment

There was some concern about debt falling due at entities below Rallye this year causing the need to dividend money from Casino and Rallye to satisfy the

Tomás Mannion30 June 2022CASINO

Iceland - comment

Some worrying headlines out from B&M this morning, stating sales in Q2 were down 2.2% versus last year and in their UK core store base, the revenue decline was 9.1%. However,

Tomás Mannion29 June 2022ICELAND

Takko - comment

We are out this morning, but first impressions of Takko’s results are very disappointing. Relative to our expectations, Takko have underperformed by

Wolfgang Felix29 June 2022TAKKO

Amigo Loans – Golden pathways

Please find our unchanged analysis here.

We have been waiting to see the next step in Amigo’s rehabilitation since May when the company successfully obtained High court approval for its Scheme of Arrangement. The new lending products unveiled today represent the next milestone along a pathway set out by the Financial Conduct Authority (FCA) to allow the company to resume lending. If Amigo can continue to stay that course, the opportunities for bondholders to participate in the final piece of the puzzle will come soon.

Aengus McMahon28 June 2022AMIGO

Adler - comment

German TV broadcast a 45-minute program yesterday night on Adler and its ‘dubious business’. Naturally,

Wolfgang Felix28 June 2022ADLER

Adler - comment

ARE bonds dropped on Friday on news that ADJ were pressing ahead with the squeeze-out of ARE minority shareholders, so as to facilitate

Wolfgang Felix27 June 2022ADLER

Douglas - Modelling for elasticity

Please find our updated analysis here.

Much around Douglas has changed since last year. The highly indebted refinancing last year had come at the height of the market and was predicated on an online-infused IPO story that’s since returned to the Hut it came from. What’s more, inflation is now squeezing consumer wallets, it’s German home market has posted poor numbers and the online division has had to take a step back YoY. But not all is bad. The SOP program has been a success and the affordable luxury market is once again showing signs of holding up better than other retail sectors. We also think it’s key to understand the company’s supply side. So having expanded our model to reflect these new realities, how does the company behave over the next 12 months and what will be thereafter?

Wolfgang Felix27 June 2022DOUGLAS

Boparan - timing is art of delivery.

Please find our updated analysis here

We are wearily familiar with the challenges that Boparan faces in its relationship with its customer base. The recovery of previously incurred inflationary costs in Fiscal Q3 has supported the liquidity position of Boparan. Long term we need to see a pricing system that is: 1. Comprehensive and 2. Timely. The urgency here is only exacerbated by the impact of the war in Ukraine on costs, as price rises flow through to consumers and there will be some volume drag as consumers balance the higher cost of their weekly shop against the absence of cheaper protein sources.

Aengus McMahon24 June 2022BOPARAN