Archive

Monthly Archives: May 2019

29th May 2019

Thank havens!

Pride comes before a fall… Aagghhh. Sell in May! We suppose that the strategy would have worked. It didn’t feel as though it was a necessary evil, given we had come off the back of a good April for performance – but trade worries have started to concern much more now. Naturally, we’re going to […]
Subscribers can log in to continue reading. Otherwise, purchase The Monthly Access Pass or One Year Subscription to become a subscriber.
28th May 2019

Sitting on the fence

Excitement over for now… Back to work but we struggled to brush off the cobwebs from the long weekend, not helped by Thursday’s Ascension holiday that will keep many in Europe out on Friday as well. Still, in this much shortened week, we had another last chance to get a little bit of business done […]
Subscribers can log in to continue reading. Otherwise, purchase The Monthly Access Pass or One Year Subscription to become a subscriber.
27th May 2019

Looking to erupt

Close your eyes… After last week’s Rallye/Casino flare-up, does anyone in credit care much about idiosyncratic risk at the moment? Or even the potential for systemic event risk, for that matter? It’s tempting to think that it is just a case of closing one’s eyes and buy. We are all too well aware in the […]
Subscribers can log in to continue reading. Otherwise, purchase The Monthly Access Pass or One Year Subscription to become a subscriber.
23rd May 2019

When the chips are down

Now’s not the time to overreact… If the reality of a (much needed) debt restructuring is going to take place in the Casino/Rallye complex, bondholders are going to take additional hits to already sharply written-down holdings. It should come as no surprise we’ve got to this point, though, as the clouds were darkening for a […]
Subscribers can log in to continue reading. Otherwise, purchase The Monthly Access Pass or One Year Subscription to become a subscriber.
22nd May 2019

Time to say Goodbye

Election fever rises… We may have gushed deals on Tuesday but we had the necessary slowdown in the flow on Wednesday, which will have served the corporate bond market very well – Because it will keep investor indigestion at bay, allowing us to absorb that slew of issuance. There is always a temptation from borrowers […]
Subscribers can log in to continue reading. Otherwise, purchase The Monthly Access Pass or One Year Subscription to become a subscriber.
21st May 2019

Luv’ it, just luv’ it!

Credit in a class of its own… Resilience comes to mind when offering a description of the corporate bond market at the moment. Equities might move higher or lower by up to 1.5% in a session as they react to the headline risks, but without a bigger down-leg, credit (at worst) just treads water or […]
Subscribers can log in to continue reading. Otherwise, purchase The Monthly Access Pass or One Year Subscription to become a subscriber.
20th May 2019

When the chips are down

Collateral damage a sign of things to come… The collateral damage of the Trump order to blank Huawei on security grounds came through good and proper in the markets on Monday. What should have been – and initially looked like being – a small up or down session across the markets as they reacted to […]
Subscribers can log in to continue reading. Otherwise, purchase The Monthly Access Pass or One Year Subscription to become a subscriber.
19th May 2019

It isn’t getting any easier

Funnily enough…. The markets threatened a rout and all the ingredients were there for a steeper sell-off in last week’s final session. But we’re showing some resilience. Actually, corporate bond market investors find themselves in a good situation at the moment, and we think the conditions for that being the case are going to persist […]
Subscribers can log in to continue reading. Otherwise, purchase The Monthly Access Pass or One Year Subscription to become a subscriber.
17th May 2019

Closing “Short TCGLN” Recommendation

Recommendation

On 21 March 2019, we initiated our short recommendation:

‘TCGLN 3.875 currently trading at 67.5 have scope to fall further to 45 cash price…’

On 4 May 2019, when bonds fell to 55 cash price, we said:

‘…. we believe that the bonds have further to fall and maintain the short.’


Our rationale was that there was much uncertainty regarding the nature of the disposal of TCGLN’s airline business. Further, the need for TCGLN to retain stronger liquidity meant that any cash proceeds from a sale of the airline business would rule out the possibility of bonds being taken out. This was confirmed when TCGLN was forced to get a £300M extension from lenders to boost its liquidity position on 5 May 2019. Further, the sale of TCGLN’s £55m RCF (£650m due in 2022) was sold for a price of 60 the previous day (4 May 2019).

Recent Developments

TCGLN (B-) reported dire H1 2019 results on 16th May 2019 with a £1.456bn loss for the first half the year (compared to -£303m for H1 2018). There were expressions of interest from Virgin Atlantic and Lufthansa for TCGLN’s airline business, however these are likely to be for parts of the airline business and the nature of the bids are unknown.

TCGLN 3.875% 2023s fell to €45 cash price according to Bloomberg, exactly in line with what we predicted. Therefore, we close the trade, with a profit of +22.5 points.

Issuer Cpn Maturity S&P Deal Size Latest Px YTW% Z-Spread
THOMAS COOK GROUP PLC 6.250 15/06/2022 B €750m €48 36.888 3419bp
THOMAS COOK FINANCE 2 3.875 15/07/2023 B €400m €45 26.932 2545bp
THOMAS COOK 5Y CDS 12/20/2023 49.50 (upfront) 3610bp

 

Ash Nadershahi

15th May 2019

Here we go again!

Afraid? Seems so – or maybe not… Now THAT was completely unexpected! It was dire into the opening part of the US session, and then the markets rejoiced. The great man incredibly blinked as Trump delayed auto tariffs for up to 6 months. The markets will now think it might be a harbinger of things […]
Subscribers can log in to continue reading. Otherwise, purchase The Monthly Access Pass or One Year Subscription to become a subscriber.