United Group - comment

Having completed the Towers sale, United Group (UG) will use some of the proceeds to redeem the 2024/25 SSNs. After these maturities, the subsequent maturity is the €570m PIYC SUNs, trading at 94c/€ (12.5% YTW. Pricing levels mean the market now agrees with our thesis that BC will do whatever is necessary to refinance these bonds. However, with only 6 points of upside, trading into the SUNs is no longer compelling. Redemption at par is possible, but UG could tender for the SUNs as part of an extension. The long end of the SSN debt stack now trades at 9.5%, and BC partners may be willing to wait until November 24 to see if further compression in spreads and rates can reduce the cost of refinancing.