Branicks (DIC Asset) - comment
Branicks is currently trying to extend a €200m bridge loan beyond June 24, and has asked holders of €225m of 2024 Promissory notes to lengthen their maturities. Forcing the company into an insolvency process, with underlying asset valuations are so weak, makes little sense, so both are likely to be successful. However, the extensions and any covenant relief will come at a cost. Unsurprisingly, Branicks has also announced that no dividend will be proposed this year (€53m was paid in June 2023).
The S&P downgrade to CCC+ shouldn’t have surprised bondholders. Branicks has struggled throughout 2023. There may be some forced CLO sellers, but we suspect the price action is more a reflection of no buyers willing to step into the breach than an avalanche of sells.