Morrisons - comment

The €1bn buyback surprised us as we had expected Morrisons to use the cash to repay Term Loans. We will continue to hold both the SSNs and the SUNs. We are not rushing to exit the SUNs as the Bouygues lawsuit may have been a scary headline, but we see the parties agreeing to an out-of-court settlement. The SSNs have a minimum tender price of 90p/£, but given a current trading price of 94p/£, we wouldn’t expect bonds to be tendered at that price. With £1.6bn of the GBP SSNs outstanding, some bonds will be tendered, however, we are not convinced that Morrisons will bite. The unmodified Dutch auction will be open to all the GBP bonds (SSNs, SUNs and EMTNs. The deadline is May 31st.