Member Info for HopelessValue

I don’t think it will be 5.5%, atleast that’s very unlikely and would be highly concerning…eur rates trade much lower. It’s benchmarked vs bunds and the 8y German gov bond currently yields around 2.6%….assuming mcg is priced 1.8 over we should see a yield of around 4.4ish

Tbh I don’t think Moodys has ever rated them higher than this…went from Baa3 prior to 2020 to Baa2/stable

Probably the replacement of their 2023 bond…makes a lot of sense to me given rates are a lot lower vs UK…as long as revenues / profits match with liabilities and don’t create a large eurgbp risk…would expect new yield to be around 4.5% which wouldn’t be too bad all things considering

Yeah exactly…the only thing that’s different compared to 2022, 2020 etc is that the credit rating assigned is actually better…seems standard but they will def not go for 1.5b…I think even the notification around the hybrid was for up to 1.5b…just seems to be their standard

All of their previous bound issuance had the same language…”will not exceed 1.5b”. So doesn’t mean that they will do anything close to that. Just gives them the option

What news are we referring to? I don’t see any news articles or updates on their website.

I think you may be missing the hybrid debt…I tried to outline how I came up with 2.1b but I am not sure I get it completely right…

Also one thing that is interesting is that their bonds are actually trading fairly well compared to the rest of the market which isn’t really reflected in the share price at all

Yeah I fully get that they currently pay a lot less in interest and a lot of it is fixed for a few years…I just wanted to point out that they would be able to survive even if rates were to rise even further and to stay there for quiet some time…as market is definitely not pricing it that way

As it seems that the biggest concern for investors and market are interest payments I did some quick math on the potential interest costs…as I see it, the company has around 2.1b in interest bearing debt (~850mio longterm borrowings, 120 other non-current l, 670mio current borrowings, 500mio hybrid)…please correct my assumption if incorrect or I double account for some aspects…

If they are somewhat accurate this would lead to interest expenses of

210mio at 10%

168mio at 8%

126 at 6%

84 at 4% etc

Assuming their ebit projections of 200-215mio are correct then this would mean that even at 10% avg interest cost, they would break even (EBIT - interest).

Would be great to get your thoughts on this. Tx