Adient - two catalysts to aim at

All,

Following Adient’s strong Q1 results, please find our updated analysis here.

The company has announced two catalysts for the year:

- $200m deleveraging from existing excess liquidity

- $400m sale of its minority stake in an Interiors JV with Yanfeng - also to be used for deleveraging.

The idea of treating Adient as a tentative macro short never quite materialised. But with performance visibly strengthening and hard catalysts to look forward to the bonds look increasingly attractive for those of us playing in 5% YTM paper. 

On the downside we have a weak guidance for Q220 - especially for China. But it is a) priced in and b) the company raised outlook regardless. So bar a US recession, a widened coronavirus epidemic or a flaring up of trade tensions again, these bonds are probably going to tighten further.

Wolfgang