Category Archives for "Fixed Income Market"

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 […]
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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 […]
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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 […]
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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 […]
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14th May 2019

We can work it out

Pragmatism returns… First the storm, then the calm. What happens next depends on the next Trump tweet or the headlines out of China. That’s where and how policy and its response is being aired to the watching nervous global markets. The markets should know better than respond to every Trump tweet.  He is a dealmaker […]
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13th May 2019

Never surrender

Time to be afraid… That’s better! We can at least explain the market moves in the week’s opening session. The weakness across all risk asset classes was down to concerns about the lack of a trade deal and the implications and ramifications for growth if one isn’t eventually reached. Global growth coming in at over […]
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12th May 2019

Hope over fear

Scratching one’s head… Who would have thought? No trade tariff deal and not close to one but equity markets still saw it fit to rally. The US markets were having a stinker before a late rally resulted in a 50-point swing in the S&P during last week’s final session. We’re scratching around for reasons as […]
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9th May 2019

Still a game of chicken

Market vulnerabilities boost primary credit… Just when we thought that markets ought to have been ripping higher/tighter – equity/credit spreads – they’ve come unstuck following those tweets from the President. Just about everything in terms of market direction for May and June potentially hangs on the outcome of the talks currently underway, and we can […]
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8th May 2019

All’s fair in love and war

Trump’s position of strength… We can suppose that, as it stands, the markets are having one of those ‘we don’t know what to do’ moments. Trade negotiations are about to begin, but a positive outcome is far from certain as the Trump administration ramps up the pressure. And he was at it again with an […]
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