EU CONSUMER STAPLES: Consumer & Transport: Week in Review

More blatant compression returned this week as double BB’s tightened 8bps. The love for high-beta names was not mirrored in equity markets which saw high-single digit falls from names like PVH and Coty. Meanwhile, VF was one of the few names to not compress this week - yet it is on track to end up in equity markets. Unilever’s Ice-Cream co spin-off (BBB) will join the M&A funding line-up.

• Edenred & Pluxee started the week down -5-6% on Turkey regulation headlines and ended the week on a similar move on French budget leaks. Equities continued trading at multi-year lows and now on single digit multiples now. As we have said before we do not have visibility on EBITDA exposure to regulation globally given Edenred’s refusal to disclose.
• Kering agreed with the current majority owner of Valentino to push the cross options back to earliest 2028 exercise. Separately majority owner Artemis denies it is looking to sell its stake in Puma. The streak of positive news helped credit rally through YTD tights and non-cyclical BBB names; we would caution levels here ahead of Q3 results next month.
• Mobico reports lacklustre results again but keeps FY guidance unchanged, implying double digit growth to come in 2H. Equities -12% this week questioning the guidance.
• Armani founder, Giorgio, passed away earlier this week and according to leaks dictated for 15% of the private company to be sold within 18 months and another 30-55% within 3-5ys (to the same seller). LVMH, L’Oreal and Essilor are all explicitly mentioned as potential suitors to target. On €400m EBITDA and lower 20% margin co, we don’t see the 15% stake as a mover for any of the mentioned names.
• Lufthansa may buy out most of the remaining stake in ITA from the Italian government in June according to leaks from the Corriere. It may add up to 0.4x to the current 2.0x levered BS on ITA’s heft lease load.
• VFC senior unsecured debt is downgraded by one notch while the family rating is left unchanged at Moody’s. It is on the back of a (undrawn) revolver being secured. Earnings may determine if it remains undrawn when the €500m Mar-26s come due.
• Suedzucker is saved from S&P rating action for now despite holding well outside IG thresholds. If it can hold in IG may hinge in part on if an expected recovery in sugar prices later this year plays out as expected.
• Unilever’s spin-off Ice-Cream co was rated by S&P who also detailed funding plans that includes a €3b bridge facility. It is expected to be refinanced within next 6 months.
• Coty saw no rating outlook change at Fitch despite S&P moving to negative the week earlier.
• JAB saw no positive rating action from S&P as rating agencies await to see what it does with cash proceeds.
• PostNL saw positive comments from S&P after it announced last week it had requested Dutch government permission to break away from USO mail obligations.
• Primary (NIC in brackets): Maersk 9y (0)