Europcar - RCF Confident, Bonds Cautious

All,

Please refer to our unchanged analysis here.

Europcar bonds are dropping today following news that more than E200m of the corporate RCF have been trading into more aggressive hands than those of French banks. As per our note, the ECMG bonds are positioned at the end of the food chain with the corporate RCF benefiting from extensive equity pledges throughout the structure including those of ECI, possibly some direct exposure to ECI and a g’tee from ECMG. 

RCF trading levels at 91c/E (drawn) for such low coupon paper in that amount indicate the justified confidence among the buyers that they will not be the ones to be termed out. 

The RCF is a June 2022 maturity. So any Sauvegarde plan would have to find refinancing for it. But at 91c/E the yield is too low to make sense for at least the average distressed account. If a Sauvegarde were to fail, however, the administrator in an ensuing Redressement Judiciaire would conduct an asset sale and although formal credit bidding is not an option, that would put the RCF in pole position for the equity. 

On the RCF’s display of confidence, the bonds are trading weaker today, much as anticipated in our last note, if not yet low enough for what could be coming. 

Wolfgang