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Please find our unchanged analysis of Adler here.

“Thief, thief!” it echoed throughout the town square when a watchful citizen had noticed a stranger inside the bank. The stranger, he claimed, was one of its own shareholders, who had no business in the vault. The bank called in the detective and yes, the shareholder had indeed been in the vault and what’s more, he had been let in from the inside. He had also left plenty of fingerprints all over the bank, especially on the director's desk. But then the detectives noticed something else. All the jewellery was still in the vault. The detective could find no evidence that the shareholder had actually robbed the bank for more than taxi money.

Please refer to our updated analysis here.

That the budget management handed down this time last year was nonsense was clear before we received it. Today we are of course still waiting for the big news, but it’s been worthwhile having the first financial statements post-restructuring, even as we are still missing Inc. data. With Malta as good as gone, Intralot have more time to market the Inc. as only a high price will go to delever the 24s. But what of the ROW business now and the new contracts Intralot won in 2020 and 2021?

Please find our initiation of Nidda BondCo here

In recent weeks any exposure to Russia has brought increased scrutiny Nidda has come under the microscope. There is plenty of potential exposure for Nidda although the ability to deal with the consequences if they arise is a very different question.
Nidda has plenty of liquidity and there is scope for the owners to raise further debt if necessary. The originally intended IPO exit may be delayed but given the SSNs don't mature until September 24, the owners have plenty of time to wait for a more opportune moment or even to reduce leverage ahead of a refinancing exercise.

Please find our updated analysis here.

Having participated in the restructuring we are very happy with the result. But while the company regained shipshape, the sea has become rougher. Bunker prices have risen substantially and the strait is closed to passengers, even as King Philippe has publicly acknowledged Morocco’s interest in West Sahara. So cash flow has been lagging forecasts. Nevertheless, authorities are expecting a super summer, particularly in the Strait. So what do we make of the latest liquidity forecasts and what is the outlook from here?

We have updated our Casino model here.

"What good is performance when you are not the beneficiary?" That must be one question on Naouri’s mind, along with: “How do I buy out more of my pesky bondholders?” and "Where do I actually find this performance in the end - away from France Retail that is?". We think we actually have some €1.5bn answers to the last question, but it is also the last to be answered. The first should probably be if Casino’s current weakness is tactical or if we are actually headed for a covenant breach and possibly for a Sauvegarde double-decker.

Please find our updated analysis here.

Boparan’s options for raising fresh cash are dictated by the terms of its SSNs and the RCF. The bonds have a £75m carve out for securitisation. This would be senior to the existing SSNs (adding 0.6x turns of leverage ahead of the SSNs). Another option is an equity raise along with debt. The level of cash needed will become clearer at the FY results announcement tomorrow, 24 November.

Please find our updated model on Iceland here.

Energy costs, food inflation, and return to workplace post-Covid all weigh on Iceland’s recent bond movements. In our analysis, we focus on calculating the impact of all the moving forces on Iceland’s underlying performance. Iceland is not immune from these cost pressures and, due to the nature of its high frozen content, Iceland has a higher exposure to energy costs than a “normal” food retailer.

However, the market…

Please find our updated model of Douglas here.

As we are sieving through yieldy, but performing names, it’s been time to sharpen our pencils and form an opinion on Douglas and of course, you’ve seen our decision already two weeks ago. Nevertheless, with Q122 behind us, we‘ve taken some time to understand the company’s online growth, allocate earnings to channels and geographies as best we can and to estimate earnings and liquidity through the remainder of the year.

Please find our updated analysis here.

Ahead of next week’s reporting, we have re-built our model to reflect the latest feed prices and estimate the incremental impact on Boparan’s liquidity this year. But arithmetic being key, it’s important to look beyond the spreadsheets. The narrow margin the company achieves may yet prove efficient in raising prices to supermarkets.

Please find our updated analysis here.

While the oil markets continue to gyrate, we maintain our focus on production levels, the main driver of Tullow’s financial health. We don’t dismiss the benefits of the current oil price to Tullow, but Tullow have a large hedge position, with 75% protection on the downside (at $55/bbl). Tullow are exposed to 40% on the upside due to naked puts purchased under the conditions of the now refinanced RBL facilities. This means that Tullow are only hedged on the upside for 60% of their planned FY22 production at $78/bbl.

Please find our initiation on Standard Profil here.

From issuance at par less than a year ago to current levels of below 80c, investors in Standard Profil have hit many potholes. The Company is suffering from raw material prices increasing year-over-year, OEM production disrupted, initially by semiconductor chip shortage and now by exposure to Ukrainian suppliers.

Please find our updated analysis here.

As we emerge from the Covid pandemic governments are seeking to kick start the economy through infrastructure investment. As a result, OHLA is now beginning to see significant growth in its pipeline of work. Free cash flow is turning positive but is modest and is likely to remain so, although it will benefit from the end of onerous project costs by end of 2022. Inflationary pressures in raw material and labour costs will need continual managing with clients. So what do we make of it?

Please find our updated model on Vallourec here.

Vallourec’s balance sheet is typical of a post restructured Company - an ill-fitted debt structure. Vallourec’s main bond has a coupon of 8.5%, which, for a business that is less than 2.0x leverage is wholly inappropriate. However, we continue to have concerns about the cash generative nature of Vallourec.

Please find our updated analysis here.

Since the completion of the sale of 55% of the Specials business, Bondholders have been hoping for much of the cash to come their way. KME's banks have now determined that they will be the key participant in deciding the final destination of the €200m in cash. Unless KME can secure additional facilities, it will have to fund €75m of Trade Payable exposure currently supported by bank-issued LC’s. Lenders will not allow KME to leak cash needed in the business to tender for bonds.

Please find our new analysis of Frigoglass here.

While we still have some open questions, we feel we have substantially concluded on our view of Frigoglass. Following the fire at its Romanian plant last summer, the company has displayed astonishing stability - so much so, that we are feeling a little unsure about extrapolating that. Meanwhile, cash is running low outside Nigeria and the timing of insurance payments for the fire becomes important in the context of rebuilding the plant this year.

Please find our analysis here, including a small model for Amigo 2.0.

The announcement from Amigo yesterday has little direct impact on bondholders, but it puts existing shareholders on notice that Amigo will go into administration if they fail to approve the issuance of heavily dilutive shares and that at most they are going to be left with a mere 5% of the business. Implicitly it also sets the scene for the first hearing on the SOA, which is expected in mid-February, where the company are planning to haircut redress claimants at 40p/£. Still, substantially larger under the first scheme proposal. The court will feel vindicated.

Please find our updated analysis here.

Vindication has been a long time coming. Reading through our religiously bullish notes on Matalan over the last two years, we must admit that several times along the way we thought we’d be well out of the crisis by now. But the pandemic is still with us and so - behold - is Matalan, rocking a £100m EBITDA (on first impressions only). Our 2LNS are on fire.

Importantly though, Matalan is pulling through this crisis remarkably well and for all the right reasons.

Please find our initiation on Accentro Real Estate (Accentro) here.

Accentro’s SUNs are yielding 18% for a maturity of only 16-months, and German residential real estate remains a highly sought-after investment for institutions and individual investors. So should we be persuaded to take a position? We have concerns about book value, in particular of a portfolio of stressed rental assets acquired in late 2020. On paper, these rental assets represent a significant opportunity. However to date management has not yet demonstrated its ability to reduce vacancies from a staggering 41% and for all the foreign comps suggesting vast hidden reserves, the portfolio may have its idiosyncrasies. In judging Accentro’s liquidity, modeling its cash flows, considering its timing and discussing what its alternatives would or wouldn’t mean for bondholders, we come to our conclusion.

Please find our updated analysis here.

So we are feeling rather pleased with ourselves, having upgraded our position just ahead of the restructuring announcement. But what now? The bonds yield 10% YTM and for all the legal and European Commission work we’ve done, TAP is actually an airline (upon closer inspection...).

Please find our updated analysis with videos here.

After all that’s been going on last week, we have decided to make a change to our positioning in the bonds. In light of the liquidation of most of the portfolio under Adler Real Estate, the entity will be cleared of most of its debt, except probably for the bonds we are holding. Instead, a bond we long thought was illiquid seems to offer at least some availability now and so to reflect the limited scale in the instrument we are only reinvesting half of our position. We crystallise a 75bps loss on our existing notes and enter the new position 75bps lower with a view to a 12% return next year for very limited risk.

Please refer to our slightly updated analysis here.

So we’ve been looking at Adler a company with two daughters: a pretty one in plain clothing and one that’s all dressed up, but they don’t like to mention. Yesterday and today, news were all about the pretty daughter. Management did not give us what everyone wanted yesterday, more information of some of those property transactions around Consus. But we did of course receive news of the sale of the Brak option to LEG. There is some uncertainty around a difference in valuation of the portfolio transaction with LEG, but that aside the news have been reasonably positive.